SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 12, 1999
KIRBY CORPORATION
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 1-7615 74-1884980
- ---------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1775 St. James Place, Suite 200, Houston, Texas 77056-3453
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 435-1000
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 12, 1999, Kirby Corporation ("Kirby") completed the
acquisition of Hollywood Marine, Inc. ("Hollywood"), by means of a merger of
Hollywood into Kirby Inland Marine, Inc. ("KIM"), a wholly owned subsidiary
of Kirby. Pursuant to the Agreement and Plan of Merger, Kirby acquired
Hollywood for an aggregate consideration of $322,200,000 consisting of
$89,600,000 in common stock (4,384,000 shares at $20.44 per share),
$128,700,000 in cash, and the assumption of $103,900,000 of Hollywood's
existing debt and certain other liabilities. The aggregate purchase price is
subject to post-closing adjustments. Hollywood was owned by C. Berdon
Lawrence and certain trusts for members of his family.
Financing for the cash portion of the transaction and the repayment of
Hollywood's existing debt was through the Company's existing $100,000,000
undrawn bank revolving credit agreement with Chase Bank of Texas, N.A. as
agent bank and through a new $200,000,000 credit facility with Chase
Bank of Texas, N.A. as administrative agent; Bank of America, N.A.
as syndication agent bank; and Bank One, Texas N.A. as documentation agent.
Hollywood, located in Houston, Texas, is engaged in the inland tank
barge transportation of chemicals and petrochemicals, refined petroleum
products, black oil and pressurized products primarily along the Gulf
Intracoastal Waterway, the Houston Ship Channel and the lower Mississippi
River. Hollywood operates a fleet of 256 inland tank barges, with 4.6
million barrels of capacity, and 104 inland towboats. Kirby intends to
continue to use the assets of Hollywood in the same business that Hollywood
conducted prior to the merger.
The purchase price was determined through arm's-length negotiations
between representatives of Kirby and Hollywood and was based on an evaluation
of the fair market value of the inland transportation equipment in the
current industry environment. Prior to the negotiations, there existed no
material relationships between Hollywood and Kirby or any of Kirby's
subsidiaries, or any of its affiliates, any officer, or director of Kirby, or
any associate of any officer or director of Kirby.
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Kirby Corporation
(Registrant)
By: /s/ G. Stephen Holcomb
-----------------------------------
G. Stephen Holcomb
Vice President and Controller
Dated October 14, 1999
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired:
1. Independent Auditors' Report.
2. Consolidated Balance Sheets as of December 31, 1997 and 1998
and June 30, 1999 (Unaudited).
3. Consolidated Statements of Operations for the years ended
December 31, 1996, 1997 and 1998 and the six months ended June
30, 1998 and 1999 (Unaudited).
4. Consolidated Statements of Stockholder's Equity for the years
ended December 31, 1996, 1997 and 1998 and the six months
ended June 30, 1999 (Unaudited).
5. Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1997 and 1998 and the six months ended June
30, 1998 and 1999 (Unaudited).
6. Notes to Consolidated Financial Statements for the years ended
December 31, 1996, 1997 and 1998 and the six months ended June
30, 1998 and 1999 (Unaudited).
(b) Pro Forma Financial Information:
1. Unaudited Pro Forma Condensed Combined Balance Sheet as of
June 30, 1999.
2. Unaudited Pro Forma Condensed Combined Statement of Earnings
for the year ended December 31, 1998.
3. Unaudited Pro Forma Condensed Combined Statement of Earnings
for the six months ended June 30, 1999.
4. Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of July 28, 1999, by
and among Kirby Corporation, Kirby Inland Marine, Inc.,
Hollywood Marine, Inc., C. Berdon Lawrence, and Robert B. Egan
and Eddy J. Rogers, Jr., as Co-Trustees under certain Berdon
Lawrence Trusts (incorporated by reference to Exhibit 2.1 of
Registrant's Current Report on Form 8-K dated July 30, 1999.)
10.1 Credit Agreement, dated as of October 12, 1999, among Kirby
Corporation, the Banks named therein, Chase Bank of Texas,
National Association as Administrative Agent, Bank of America,
N.A. as Syndication Agent, and Bank One, Texas, N.A. as
Documentation Agent.
23.1 Consent of KPMG LLP
<PAGE> 4
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
<PAGE> 5
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(With Independent Auditors'
Report Thereon)
and six months ended June 30, 1999 and 1998
<PAGE> 6
[KPMG LETTERHEAD]
Independent Auditors' Report
The Board of Directors
Hollywood Marine, Inc.:
We have audited the accompanying consolidated balance sheets of Hollywood
Marine, Inc. and affiliated entities as of December 31, 1997 and 1998, and
the related consolidated statements of operations, stockholder's equity and
cash flows for each of the years in the three-year period ended
December 31, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Hollywood
Marine, Inc. and affiliated entities as of December 31, 1997 and 1998, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1998 in conformity with generally
accepted accounting principles.
As discussed in note 1(j) in the notes to the consolidated financial
statements, the Company changed its method of accounting for internally
developed software costs in 1998.
KPMG LLP
Houston, Texas
March 15, 1999
<PAGE> 7
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Balance Sheets
December 31, 1997, and 1998
and June 30, 1999
<TABLE>
<CAPTION>
December 31,
------------------------- June 30,
Assets 1997 1998 1999
------------ ----------- ------------
(unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 71,457 136,956 88,811
Accounts receivable, trade 18,577,758 19,693,050 19,469,881
Other receivables 942,349 685,329 648,839
Prepaid expenses and other current assets 1,918,229 2,062,037 2,488,826
----------- ----------- -----------
Total current assets 21,509,793 22,577,372 22,696,357
Property and equipment, at cost:
Land 5,657,681 5,926,715 5,988,194
Buildings and improvements 4,858,401 6,978,171 8,749,528
Marine equipment 213,535,178 222,899,570 227,565,307
Furniture, automobiles and other equipment 9,512,028 11,963,443 12,449,704
----------- ----------- -----------
233,563,288 247,767,899 254,752,733
Less accumulated depreciation 120,803,787 129,034,399 133,358,014
----------- ----------- -----------
Property and equipment, net 112,759,501 118,733,500 121,394,719
Other assets, net 3,380,847 4,250,401 3,841,319
----------- ----------- -----------
Total assets $137,650,141 145,561,273 147,932,395
=========== =========== ===========
</TABLE>
(Continued)
<PAGE> 8
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Balance Sheets
December 31, 1997, and 1998
and June 30, 1999
<TABLE>
<CAPTION>
December 31,
------------------------- June 30,
Liabilities and Stockholder's Equity 1997 1998 1999
------------ ----------- -----------
(unaudited)
<S> <C> <C> <C>
Current liabilities:
Current installments of long-term debt $ 5,969,531 5,673,332 5,533,687
Accounts payable, trade 14,483,959 14,495,725 10,594,696
Accrued expenses 3,244,639 5,341,396 4,897,868
----------- ----------- -----------
Total current liabilities 23,698,129 25,510,453 21,026,251
Long-term debt, less current installments 78,195,181 86,855,650 91,923,452
Other long-term liabilities 8,552,236 7,096,357 5,901,199
Deferred state income taxes 1,406,978 1,262,905 1,308,909
Minority interests in consolidated entities 5,561,716 3,844,289 3,155,144
Commitments and contingencies
Stockholder's equity:
Common stock, $.10 par value; 116,667 shares
issued and 83,334 outstanding in 1997
and 1998 11,667 11,667 11,667
Additional paid-in capital 359,768 359,768 359,768
Retained earnings 43,421,682 44,177,400 47,803,221
----------- ----------- -----------
43,793,117 44,548,835 48,174,656
Less 33,333 shares held in treasury, at cost 23,557,216 23,557,216 23,557,216
----------- ----------- -----------
Total stockholder's equity 20,235,901 20,991,619 24,617,440
----------- ----------- -----------
Total liabilities and stockholder's equity $137,650,141 145,561,273 147,932,395
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 9
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Statements of Operations
Years ended December 31, 1996, 1997 and 1998
and six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Year ended December 31, Six months ended June 30,
----------------------------------------- -------------------------
1996 1997 1998 1998 1999
------------- ------------ ------------ ----------- ------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues $134,988,257 157,461,653 167,952,987 83,074,701 81,667,315
Cost of sales 104,031,977 122,305,552 133,536,122 64,387,528 64,039,522
----------- ----------- ----------- ---------- ----------
Gross profit 30,956,280 35,156,101 34,416,865 18,687,173 17,627,793
General and administrative expenses 17,715,262 17,785,852 19,795,462 9,547,755 9,305,513
----------- ----------- ----------- ---------- ----------
Operating earnings 13,241,018 17,370,249 14,621,403 9,139,418 8,322,280
----------- ----------- ----------- ---------- ----------
Other income (expense)
Interest expense (7,223,870) (7,951,302) (7,875,372) (3,929,989) (4,101,171)
Gain on disposal of assets, net 87,446 2,213,731 43,856 7,637 25,888
Other 44,535 789 (549) 28,291 20,646
----------- ----------- ----------- ---------- ----------
(7,091,889) (5,736,782) (7,832,065) (3,894,061) (4,054,637)
----------- ----------- ----------- ---------- ----------
Earnings before minority
interests and income taxes 6,149,129 11,633,467 6,789,338 5,245,357 4,267,643
Minority interests in earnings of
consolidated entities 623,507 1,502,547 1,275,737 705,342 21,730
----------- ----------- ----------- ---------- ----------
Earnings before income taxes 5,525,622 10,130,920 5,513,601 4,540,015 4,245,913
----------- ----------- ----------- ---------- ----------
Income tax expense (benefit):
Federal 19,148 - - - 2,333
Current state 114,250 138,815 55,681 62,726 127,910
Deferred state (26,107) 288,060 (144,073) (39,325) 46,004
----------- ----------- ----------- ---------- ----------
107,291 426,875 (88,392) 23,401 176,247
----------- ----------- ----------- ---------- ----------
Net earnings $ 5,418,331 9,704,045 5,601,993 4,516,614 4,069,666
=========== =========== =========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 10
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Statements of Stockholder's Equity
Years ended December 31, 1996, 1997 and 1998
and six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Common stock Additional Total
------------------ paid-in Retained Treasury stockholder's
Shares Amount capital earnings stock equity
-------- -------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 100,343 $11,667 359,768 40,051,685 10,412,941 30,010,179
Net earnings - - - 5,418,331 - 5,418,331
Dividends - - - (9,165,854) - (9,165,854)
Advance to stockholder, net - - - - (866,522) 866,522
Treasury stock acquired due
to exercise of put (17,009) - - - 14,010,797 (14,010,797)
-------- ------ ------- ---------- ---------- -----------
Balance, December 31, 1996 83,334 11,667 359,768 36,304,162 23,557,216 13,118,381
Net earnings - - - 9,704,045 - 9,704,045
Dividends - - - (2,586,525) - (2,586,525)
------- ------ ------- ---------- ---------- -----------
Balance, December 31, 1997 83,334 11,667 359,768 43,421,682 23,557,216 20,235,901
Net earnings - - - 5,601,993 - 5,601,993
Dividends - - - (4,846,275) - (4,846,275)
------- ------ ------- ---------- ---------- -----------
Balance, December 31, 1998 83,334 11,667 359,768 44,177,400 23,557,216 20,991,619
Net earnings (unaudited) - - - 4,069,666 - 4,069,666
Dividends (unaudited) - - - (443,845) - (443,845)
------- ------ ------- ---------- ---------- -----------
Balance, June 30, 1999
(unaudited) 83,334 $11,667 359,768 47,803,221 23,557,216 24,617,440
======= ====== ======= ========== ========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 11
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1997 and 1998
and six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Year ended December 31, Six months ended June 30,
----------------------------------------- -------------------------
1996 1997 1998 1998 1999
------------- ------------ ------------ ----------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net earnings $ 5,418,331 9,704,045 5,601,993 4,516,614 4,069,666
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 12,229,311 12,683,202 13,117,190 6,427,976 6,651,276
Minority interests in earnings 623,507 1,502,547 1,275,737 671,342 21,730
Deferred income taxes (26,107) 288,060 (144,073) (39,325) 46,004
Gain on disposal of assets, net (87,446) (2,213,731) (43,856) (7,639) (25,888)
Decrease (increase) in assets:
Accounts receivable, trade 402,997 (2,713,437) (1,115,292) (3,150,759) 223,169
Other receivables 45,628 (296,521) 257,020 441,727 36,490
Equipment inventory (99,606) (125,188) (361,955) (155,249) (109,700)
Prepaid expenses and other current assets 86,665 (73,423) 218,147 (107,855) (317,089)
Increase (decrease) in liabilities:
Accounts payable, trade (1,646,192) 5,013,161 11,766 (1,923,984) (4,261,729)
Accrued expenses (66,210) (1,267,576) 2,096,757 1,864,118 (81,328)
Other deferred credits 1,455,286 (366,404) (1,974,879) (479,626) (1,195,158)
----------- ---------- ----------- ---------- ----------
Net cash provided by operating activities 18,336,164 22,134,735 18,938,555 8,057,340 5,057,443
----------- ---------- ----------- ---------- ----------
</TABLE>
(Continued)
<PAGE> 12
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1997 and 1998
and six months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Year ended December 31, Six months ended June 30,
----------------------------------------- -------------------------
1996 1997 1998 1998 1999
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Cash flows from (used in) investing activities:
Purchases of property and equipment (8,246,487) (17,566,843) (19,071,579) (9,718,388) (9,540,760)
Proceeds from sales of property and equipment 173,327 459,570 105,280 24,767 299,295
Proceeds from sales of investments - 2,240,979 - - -
Net decrease (increase) in other assets (816,084) 405,395 (431,588) 644,380 362,440
----------- ----------- ----------- ---------- ----------
Net cash used in investing activities (8,889,244) (14,460,899) (19,397,887) (9,049,241) (8,879,025)
----------- ----------- ----------- ---------- ----------
Cash flows from (used in) financing activities:
Net increase in revolving lines of credit 1,250,000 2,475,000 4,300,000 10,250,000 3,850,000
Proceeds from long-term debt 30,000,000 - 10,000,000 - 3,900,000
Repayments of long-term debt (16,168,546) (6,124,527) (5,935,730) (3,510,805) (2,821,843)
Return of investment to minority interests (2,258,209) (1,437,237) (2,993,164) (1,865,635) (710,875)
Dividends paid (9,165,854) (2,586,525) (4,846,275) (3,881,665) (443,845)
Repurchase of stock subject to put (14,010,797) - - - -
Advance to stockholder, net 866,522 - - - -
----------- ---------- ---------- ---------- ----------
Net cash provided by (used in)
financing activities (9,486,884) (7,673,289) 524,831 991,895 3,773,437
----------- ---------- ---------- ---------- ----------
Net increase in cash and cash equivalents (39,964) 547 65,499 (6) (48,145)
Cash and cash equivalents, beginning of year 110,874 70,910 71,457 71,457 136,956
----------- ---------- --------- ---------- ----------
Cash and cash equivalents, end of year $ 70,910 71,457 136,956 71,451 88,811
=========== ========== ======== ========== ==========
</TABLE>
See supplemental cash flow information in note 12.
See accompanying notes to consolidated financial statements.
<PAGE> 13
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(1) Summary of Significant Accounting Policies and Business Activity
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of
Hollywood Marine, Inc., Hollywood Acquisition Company, a wholly
owned subsidiary, and affiliated limited partnerships (the
Company), all of which provide marine transportation services in
the Gulf Coast area to customers in the refining, chemical and
petrochemical industries. The affiliated limited partnerships (the
affiliated entities) over which the Company has effective control
and whose activities are an integral part of the operations of the
Company have been consolidated. All significant intercompany
balances and transactions have been eliminated in consolidation.
(b) MINORITY INTERESTS
Hollywood Marine, Inc. has a majority interest in and is the
general partner for the affiliated entities. In situations where
losses applicable to the minority interest in the affiliated
entities exceed the limited partners' equity capital, such excess
and any further loss attributable to the minority interest is
charged against the Company's interest in the affiliated entities.
If future earnings materialize in the respective affiliated
entities, the Company's interest would be credited to the extent of
such losses previously absorbed.
(c) VALUATION OF INVESTMENTS
Investments in debt and equity securities are stated at quoted
market value. Unrealized gains and losses on investments that are
available for sale are recorded as a separate component of equity
and reported as an element of other comprehensive income. The
Company adopted Statement of Financial Accounting Standards No. 130
in 1998 which establishes standards for reporting and display of
other comprehensive income and its components in a full set of
financial statements. The adoption had no effect on the financial
statements. Realized gains and losses are recognized as incurred.
Certificates of deposit are valued based on yields currently
available on comparable interests. Purchases and sales of
securities are recorded on a trade date basis.
(Continued)
<PAGE> 14
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(d) CASH EQUIVALENTS
Cash equivalents consist of short-term, highly liquid investments,
primarily Treasury bills, with an original maturity of three months
or less.
(e) CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily trade accounts
receivables. The Company's marine transportation customers include
the major oil refiners and petrochemical companies. Credit risk
with respect to these trade receivables is generally considered
minimal because of the credit history of such companies as well as
the Company having procedures in effect to monitor the credit
worthiness of customers.
(f) FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, accounts receivable, accounts payable and accrued liabilities
approximate fair value due to the short-term maturity of these
financial instruments. The fair value of the Company's debt
instruments and interest rate swaps are more fully described in
note 3, long-term debt.
(g) PROPERTY AND EQUIPMENT
The Company computes depreciation of property and equipment using
the straight-line method over the following estimated useful lives
or periods:
Buildings and improvements 7-32 years
Marine equipment 5-25 years
Furniture 3-5 years
Automobiles and other equipment 3-10 years
(Continued)
<PAGE> 15
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
The Company capitalizes expenditures which extend the useful life,
increase the capacity or improve the capability of the marine
equipment. All other maintenance and repair costs are expensed.
During 1996, 1997 and 1998, the Company capitalized approximately
$3,316,000, $2,295,000 and $6,632,000, respectively, for these
expenditures. Marine equipment is evaluated for impairment when
economic circumstances indicate that the carrying value of a
certain type of vessel may not be recoverable. Marine equipment
included approximately $526,000 and $1,858,000 related to barges
and boats under construction at December 31, 1997 and 1998,
respectively.
(h) INCOME TAXES
In 1991, the Company's corporate tax status changed to S
Corporation. As a result, the Company's earnings and losses are
taxable or deductible, under federal income tax law, to the
individual stockholders of the Company. For state tax purposes,
however, certain states do not recognize the tax status granted to
the S Corporation under the federal tax law. Accordingly, to the
extent that the basis of assets and liabilities differs for
financial and tax purposes, the Company records a provision for
deferred state income taxes. The Company calculates deferred state
income taxes using the asset and liability method. Under this
method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The impact of a change
in state income tax rates is recognized in the year of enactment.
(i) REVENUE
The Company uses a voyage accounting method of revenue recognition
which allocates voyage revenue and expense between periods based on
the percent of the voyage completed during the period.
(j) INTERNALLY DEVELOPED COMPUTER SOFTWARE
Effective January 1, 1998, the Company adopted AICPA Statement of
Position 98-1 "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use", which specifies
capitalization requirements for internal use software. During
1998, approximately $990,000 of internal use software was
capitalized. Such amounts prior to 1998 were previously expensed
as incurred.
(Continued)
<PAGE> 16
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(k) USE OF ESTIMATES
Preparation of financial statements in conformity with generally
accepted accounting principles requires the use of a number of
assumptions and estimates by management. Actual results could
differ from these estimates.
(l) INTERIM FINANCIAL STATEMENTS
The accompanying unaudited financial statements reflect all
adjustments, which are, in the opinion of management, of a normal
and recurring nature and necessary for a fair presentation of the
interim financial position, results of operations and cash flows,
as of and for the six months ended June 30, 1999 and 1998. The
results of operations for the six-month interim periods are not
necessarily indicative of results of operations for the entire
year.
(m) EARNINGS PER SHARE
Earnings per share information is not provided because it is not a
meaningful presentation for the intended purpose of these financial
statements.
(n) ADOPTION OF NEW ACCOUNTING STANDARDS
The FASB issued SFAS No. 130, "Reporting Comprehensive Income"
(SFAS No. 130) in June 1997, which establishes standards for
reporting and display of comprehensive income and its components in
a full set of financial statements. Comprehensive income includes
all changes in a company's equity, except those resulting from
investments by owners and distributions to owners, including among
other things, foreign currency translation adjustments and
unrealized gains and losses on available-for-sale securities.
Effective January 1, 1998, the Company adopted SFAS No. 130 which
had no impact on the 1998 financial statement.
(Continued)
<PAGE> 17
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
The FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131), in June 1997,
which establishes standards for reporting information about
operating segments in annual financial statements and requires that
enterprises report selected information about operating segments in
interim reports issued to shareholders. Effective December 31,
1998, the Company adopted SFAS No. 131. The Company operates in
only one segment - the marine transportation business.
The FASB issued SFAS No. 132, "Employees' Disclosures about Pension
and Other Postretirement Benefits" (SFAS No. 132) in February 1998,
which revised employer's disclosures about pension and other
postretirement benefit plans. SFAS No. 132 did not change the
measurement or recognition of those plans. The statement
standardized the disclosure requirements for pension and other
postretirement benefits to the extent practicable, requiring
additional information on changes in the benefit obligations and
fair value of plan assets that will facilitate financial analysis
and eliminate certain disclosures. Effective December 31, 1998,
the Company adopted SFAS No. 132, restating all previously reported
benefit plan disclosures to conform with the new disclosure
requirements.
(2) INVESTMENTS
Included in gain on disposal of assets are realized gains on investments
totaling $1,989,000 in 1997. All marketable securities were sold during
1997.
(Continued)
<PAGE> 18
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(3) LONG-TERM DEBT
A summary of long-term debt at December 31, 1997 and 1998 follows:
<TABLE>
<CAPTION>
1997 1998
----------- ----------
<S> <C> <C>
Notes payable collateralized by certain marine
equipment:
Installment note payable to bank, due 2001,
with interest at LIBOR + 1.125% $ 8,833,331 8,166,663
Installment notes payable to banks, due
through 2003, with interest at rates of
LIBOR + 1.50% to LIBOR + 1.75% 25,647,688 32,246,096
Various notes payable to financial
institutions, due through 2005, with
interest at varying rates of 10.05% to
10.50% 5,233,693 3,366,223
Revolving lines of credit with banks,
limitation of $22,500,000, interest
payable quarterly at LIBOR + 1.50%,
payment due in 1999 and 2000 8,000,000 18,500,000
Revolving line of credit with a bank,
limitation of $11,000,000, interest
payable quarterly at prime or
LIBOR + 1.50%, due April 2000;
collateralized by certain accounts receivable 6,450,000 250,000
---------- ----------
54,164,712 62,528,982
Subordinated notes payable to financial
institutions, due 1/3 in 2001 with the
balance due in 2003, with interest at 10.77% 30,000,000 30,000,000
---------- ----------
Total long-term debt 84,164,712 92,528,982
Less current installments of long-term debt 5,969,531 5,673,332
---------- ----------
Long-term debt, excluding current
installments $78,195,181 86,855,650
========== ==========
</TABLE>
(Continued)
<PAGE> 19
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
Substantially all of the Company's marine equipment and receivables were
pledged as collateral as of December 31, 1998. The prime rate was 7.75%
and LIBOR was 4.94% at December 31, 1998. The Company believes the
carrying amount of long-term debt approximates fair value at
December 31, 1998. The Company's debt agreements contain certain
restrictive covenants. At December 31, 1998, the Company's subordinated
notes payable restrict the Company's ability to incur new indebtedness
until certain financial thresholds are met.
During 1995, the Company entered into an interest rate swap to fix the
interest rate on some of its floating rate debt. The agreement provides
that, rather than using a ninety day LIBOR rate base in calculating the
interest rate, a fixed rate base of 7.08% will be used on $20,000,000 of
floating rate debt for three years. A second layer of $20,000,000 will
use a fixed rate base of 7.28% for five years. At December 31, 1998,
based on the quoted market price as provided by the financial
institution which is the counterparty to the swap, the Company could
purchase a swap that would cancel the effects of the existing swap for
$540,705.
The aggregate payments due on long-term debt in each of the next five
years are as follows:
Year ending
December 31, Amount
------------ -----------
1999 $ 5,673,332
2000 23,710,678
2001 29,447,536
2002 6,084,283
2003 26,798,043
Thereafter 815,110
----------
$92,528,982
==========
Debt payments scheduled for 1999 have been excluded from current
maturities as the Company has the intent and ability to refinance these
amounts under existing lines of credit on a long term basis.
(4) INCOME TAXES
Although the Company's corporate tax status changed to S Corporation in
1991, the Company remains subject to federal income taxes on "built-in
gains" as a result of the change in tax status. The Company recognized
no built-in gains taxes in 1997 or 1998. Management believes future
taxes on built-in gains, if any, will not be material to the
consolidated financial statements of the Company.
(Continued)
<PAGE> 20
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
The tax effects of the principal temporary differences that give rise to
deferred tax assets and liabilities at December 31, 1997 and 1998 are
approximately as follows:
<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Deferred state income tax assets:
Financial statement deferred compensation
accruals $ 134,000 105,000
Financial statement insurance accruals 249,000 144,000
Difference between book and tax basis of
minority interest 120,000 86,000
Other 10,000 3,000
--------- ---------
513,000 338,000
--------- ---------
Deferred state income tax liabilities -
depreciation 1,920,000 1,601,000
--------- ---------
$1,407,000 1,263,000
========= =========
</TABLE>
Management believes it is more likely than not that sufficient taxable
income will be generated in future years to fully utilize the deductible
temporary differences comprising deferred tax assets at December 31,
1998 and, accordingly, has not recorded a valuation allowance. In 1998,
the Company revised its estimated state effective tax rate resulting in
a realization of deferred income taxes in the amount of $307,000.
The tax basis of the Company's net assets is approximately $31,000,000
less than net book value as of December 31, 1998.
(5) MINORITY INTEREST
During 1998, the Company purchased some of the limited partnership
interests in several affiliated entities for a total purchase price of
approximately $5,875,000. The excess of the purchase price over the
book value of the limited partnership interests has been recorded as
marine equipment, but not in excess of fair value.
(Continued)
<PAGE> 21
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(6) STOCKHOLDER'S EQUITY
The Company has authorized 300,000 shares of $.10 par value common
stock.
Certain stockholders were given the right, a put option, to require the
Company to purchase their shares of common stock at a mutually agreed
upon price, or, if such price cannot be mutually agreed upon, at a fair
market value. The Company purchased the remaining 17,009 shares subject
to this option in two separate transactions in 1996 for a total of
approximately $14,011,000.
During 1995, the Company advanced $1,000,000 to these stockholders, with
the loan subject to interest at prime and due on or before March 15,
1998. During 1995, $133,478 was repaid leaving a balance of $866,522
which was recorded as a reduction of stockholders' equity. The
remaining balance was repaid during 1996.
(7) PENSION PLAN
On January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 132, "Employers' Disclosures about Pension and
Other Post Retirement Benefits". This statement revises required
disclosures for pension and other post retirement benefits, but does not
change the method of accounting for such plans.
The Company has a non-contributory defined benefit pension plan (the
Plan) covering substantially all of its employees. Plan benefits are
based on the participants' years of service and compensation.
(Continued)
<PAGE> 22
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
The Company also provides, through nonqualified plans, supplemental
pension payments in excess of qualified plan limits imposed by Federal
tax law. These plans cover officers and certain key employees and serve
to restore the combined pension amount to original benefit levels.
These plans are unfunded apart from the general assets of the Company.
The pension benefit obligation and pension expense under these plans
follow:
<TABLE>
<CAPTION>
Fiscal year
Change in projected --------------------------------------
benefit obligation 1996 1997 1998
----------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Projected benefit obligation at
January 1 $16,785,430 19,373,468 21,479,627
Service cost 1,132,191 1,180,085 1,364,911
Interest cost 1,282,281 1,429,895 1,652,736
Plan amendments - - -
Actuarial loss (gain) 501,102 (101,387) 2,748,520
Benefits paid (327,536) (402,434) (411,572)
---------- ---------- ----------
Benefit obligation at
December 31 $19,373,468 21,479,627 26,834,222
========== ========== ==========
Fiscal year
--------------------------------------
Change in plan assets 1996 1997 1998
----------------------------------- ------------ ----------- -----------
Fair value of plan assets at
January 1 $11,934,700 13,826,583 17,789,935
Actual return on plan assets 1,068,419 2,345,786 2,606,137
Employer contribution 1,151,000 2,020,000 2,015,500
Benefits paid (327,536) (402,434) (411,572)
---------- ---------- ----------
Fair value of plan assets at
December 31 $13,826,583 17,789,935 22,000,000
========== ========== ==========
</TABLE>
(Continued)
<PAGE> 23
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
<TABLE>
<CAPTION>
Fiscal year
--------------------------------------
Reconciliation of Funded Status 1996 1997 1998
----------------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Funded status at December 31 $(5,546,885) (3,689,692) (4,834,222)
Unrecognized (gain)/loss 2,349,795 926,237 2,475,645
Unrecognized prior service cost 3,162,381 2,757,504 2,352,627
Unrecognized transition
(asset)/obligation (37,704) - -
---------- ---------- ----------
Net amount recognized at
December 31 $ (72,413) (5,951) (5,950)
========== ========== ==========
Prepaid benefit cost $ 810,725 1,351,345 1,870,125
Accrued benefit liability (1,238,314) (1,441,764) (1,903,719)
Intangible asset 355,176 84,468 27,644
---------- ---------- ----------
Net amount recognized $ (72,413) (5,951) (5,950)
========== ========== ==========
Fiscal year
--------------------------------------
Plan Obligations 1996 1997 1998
----------------------------------- ------------ ----------- -----------
Projected benefit obligation at
December 31 $19,373,468 21,479,627 26,834,222
Accumulated benefit obligation at
December 31 13,703,030 15,463,008 19,021,221
Fiscal year
--------------------------------------
Net Periodic Pension Cost 1996 1997 1998
----------------------------------- ------------ ----------- -----------
Service cost $ 1,132,191 1,180,085 1,364,911
Interest cost 1,282,281 1,429,895 1,652,736
Expected return on plan assets (943,729) (1,090,477) (1,407,025)
Amortization of prior service cost 404,877 404,877 404,877
Amortization of transition
(asset)/obligation (75,100) (37,704) -
Recognized loss/(gain) 104,772 66,862 -
---------- ---------- ----------
Net periodic benefit cost $ 1,905,292 1,953,538 2,015,499
========== ========== =========
</TABLE>
(Continued)
<PAGE> 24
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
Fiscal year
----------------------------
Actuarial assumptions 1996 1997 1998
------------------------------------- ------ ----- -----
Discount rate 7.50% 7.50% 7.00%
Expected return on plan assets 8.00 8.00 8.00
Average rate of compensation increase 5.00 5.00 5.00
The Company's funding policy for the plans is to fund at least the
minimum annual contribution required by applicable regulations. Plan
assets consist of fixed income investments and marketable equity
securities. There is a reasonable possibility that discount rates can
change which could materially affect the benefit obligations and prepaid
pension cost.
The Company sponsors a 401(k) benefit plan covering substantially all
employees. These plans provide for employer contributions based
primarily on employee participation. The total expense under the plans
was $344,000, $543,000 and $666,000 in 1996, 1997 and 1998,
respectively.
(8) COMMITMENTS AND CONTINGENCIES
LEASES
The Company rents office and warehouse space, land, and equipment under
non-cancelable operating leases. Future minimum lease payments under
such leases as of December 31, 1998 were approximately as follows:
Year ending
December 31, Amount
------------ -----------
1999 $ 1,982,000
2000 1,787,000
2001 1,638,000
2002 1,324,000
2003 1,344,000
Thereafter 3,247,000
----------
$11,322,000
==========
Total rental expense was approximately $1,993,000, $2,418,000 and
$2,221,000 in 1996, 1997 and 1998, respectively.
(Continued)
<PAGE> 25
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
CONTINGENCIES
Weather can be a major factor in the day-to-day operations of the marine
transportation business. Adverse weather conditions, such as fog in the
winter and spring months, can impair the operating efficiencies of the
fleet. Shipments of products can be significantly delayed or postponed
by weather conditions, which are totally beyond the control of
management. River conditions are also factors which impair the
efficiency of the fleet and can result in delays, diversions and
limitations on night passages, horsepower requirements and size of tows.
Additionally, much of the inland waterway system is controlled by a
series of locks and dams designed to provide flood control, maintain
pool levels of water in certain areas of the country and facilitate
navigation on the inland river system. Maintenance and operations of the
navigable inland waterway infrastructure is a government function
handled by the Corps of Engineers with costs shared by industry.
Significant changes in governmental policies or appropriations with
respect to maintenance and operations of the infrastructure could
adversely affect the Company.
The marine transportation business is subject to regulations by the
United States Coast Guard and federal and state laws. The Company
operates in markets subject to the Jones Act, a federal law that
restricts domestic marine transportation to vessels built and registered
in the United States. The Company believes that additional safety,
environmental and occupational health regulations may be imposed on the
marine industry. The Company believes that is currently operating to
standards at least the equal of such anticipated additional regulations.
However, there can be no assurance that any such new regulations or
requirements, or any discharge of pollutants by the Company, will not
have an adverse effect on the Company.
LITIGATION
The Company is involved in various claims and legal actions arising in
the ordinary conduct of business. In the opinion of management, the
disposition of these matters will not have a material adverse effect on
the Company's consolidated financial position, results of operations or
liquidity.
(9) MAJOR CUSTOMER
No one customer represented more than 10% of the Company's sales in
1996, 1997 or 1998.
(Continued)
<PAGE> 26
HOLLYWOOD MARINE, INC.
AND AFFILIATED ENTITIES
Notes to Consolidated Financial Statements
December 31, 1997 and 1998
and June 30, 1999
(10) SUPPLEMENTAL CASH FLOW INFORMATION
The Company paid approximately $7,142,000, $7,936,000 and $8,101,000 for
interest and $187,000, $311,000 and $100,000 for state income taxes in
1996, 1997 and 1998, respectively.
<PAGE> 27
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
<PAGE> 28
KIRBY CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
The following table sets forth summary unaudited pro forma condensed
combined financial statements which are presented to give effect to the
merger. The information was prepared based on the following assumptions:
* The merger will be accounted for pursuant to the purchase method of
accounting in accordance with generally accepted accounting
principles.
* The statements of earnings assume that the merger was consummated
on January 1, 1998. The balance sheet assumes that the merger was
consummated on June 30, 1999.
* The expected cost savings through the consolidation of the
corporate headquarters of the two companies, the elimination of
duplicate shoreside staffs and expenses, and improved operating
efficiencies within the marine transportation operations, which are
estimated to be at least $10 million, are excluded from the pro
forma combined financial statements. A significant portion of the
$10 million of savings is expected to be realized in the year ended
December 31, 2000 and substantially all of the amount is expected
to be realized in the year ended December 31, 2001.
The unaudited pro forma condensed combined financial statements are not
necessarily indicative of the results of operations or the financial position
which would have occurred had the merger been consummated at January 1, 1998,
nor are they necessarily indicative of future results of operations or
financial position. The unaudited pro forma condensed combined financial
statements should be read in conjunction with the historical consolidated
financial statements of Kirby, incorporated by reference in this document,
and the historical consolidated financial statements of Hollywood, presented
in this document. Certain reclassifications have been made to Hollywood's
historical financial statements to reflect Kirby's presentation of financial
information.
<PAGE> 29
KIRBY CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------- ----------------------------
Kirby Hollywood Adjustments Combined
-------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 882 $ 89 $ 971
Available-for-sale securities 17,378 17,378
Accounts receivable, net 67,070 20,119 87,189
Inventory - finished goods 13,323 13,323
Other current assets 7,481 2,488 9,969
-------- ------- ------- --------
Total current assets 106,134 22,696 128,830
Property - net 252,749 121,395 131,432 (b)
(772) (j) 504,804
Goodwill - net 5,111 137,778 (a) 142,889
Other assets 15,476 3,841 775 (d)
(697) (i)
(407) (k)
2,396 (h) 21,384
-------- ------- ------- --------
$ 379,470 $147,932 $270,505 $ 797,907
======== ======= ======= ========
Current liabilities:
Current portion of long-term debt $ 5,333 $ 5,534 $ (5,534) (d) $ 5,333
Accounts payable and accrued liabilities 65,040 15,492 3,225 (e) 83,757
-------- ------- ------- --------
Total current liabilities 70,373 21,026 (2,309) 89,090
Long-term debt - less current portion 122,969 91,923 136,771 (d)
2,285 (k)
4,233 (l) 358,181
Deferred income taxes 40,605 1,309 63,349 (c) 105,263
Other long-term liabilities 6,165 9,056 1,208 (i) 16,429
-------- ------- ------- --------
Total liabilities 240,112 123,314 205,537 568,963
-------- ------- ------- --------
Stockholders' equity:
Common stock 3,091 12 (12) (g) 3,091
Additional paid-in capital 158,892 360 (360) (g)
16,487 (f) 175,379
Accumulated other comprehensive income (241) (241)
Retained earnings 157,657 47,803 (43,570) (g)
(4,233) (l) 157,657
Treasury stock (180,041) (23,557) 23,557 (g)
73,099 (f) (106,942)
-------- ------- ------- --------
Total stockholders' equity 139,358 24,618 64,968 228,944
-------- ------- ------- --------
$ 379,470 $147,932 $270,505 $ 797,907
======== ======= ======= ========
See accompanying notes to unaudited pro forma condensed combined financial statements.
</TABLE>
<PAGE> 30
KIRBY CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1998
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------- ---------------------------
Kirby Hollywood Adjustments Combined
-------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Marine transportation $244,839 $167,335 $412,174
Diesel engine services 82,241 82,241
Other 5,175 43 5,218
------- ------- ------- -------
332,255 167,378 - 499,633
------- ------- ------- -------
Costs and expenses:
Cost of sales and operating expenses 212,242 117,883 (10,032) (m) 320,093
Selling, general and administrative 39,473 19,572 (1,575) (n)
93 (m)
(1,323) (o) 56,240
Taxes other than income 7,646 4,035 11,681
Depreciation and amortization 27,383 13,036 556 (p)
(150) (o)
4,592 (p)
2,243 (m) 47,660
Impairment of long-lived assets 8,333 8,333
------- ------- ------- -------
295,077 154,526 (5,596) 444,007
------- ------- ------- -------
Operating income 37,178 12,852 5,596 55,626
Equity in earnings of insurance affiliate 1,325 1,325
Loss on sale of insurance affiliate (10,536) (10,536)
Equity in earnings of marine affiliates 946 618 (220) (q) 1,344
Interest expense (11,898) (7,956) (15,221) (r)
7,956 (s) (27,119)
------- ------- ------- -------
Earnings before taxes on income 17,015 5,514 (1,889) 20,640
(Provision) credit for taxes on income (6,906) 88 (950) (t)
(1,961) (u) (9,729)
------- ------- ------- -------
Net earnings $ 10,109 $ 5,602 $ (4,800) $ 10,911
======= ======= ======= =======
Net earnings per share of common stock:
Basic $ .46 $ .42
======= =======
Diluted $ .46 $ .41
======= =======
Common stock outstanding:
Basic 21,847 4,384 (v) 26,231
Diluted 22,113 4,384 (v) 26,497
See accompanying notes to unaudited pro forma condensed combined financial statements.
</TABLE>
<PAGE> 31
KIRBY CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1999
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------- ---------------------------
Kirby Hollywood Adjustments Combined
-------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Marine transportation $121,401 $81,389 $202,790
Diesel engine services 41,135 41,135
Other 381 26 407
------- ------- ------ -------
162,917 81,415 - 244,332
------- ------ ------ -------
Costs and expenses:
Cost of sales and operating expenses 107,095 56,256 (4,501) (m) 158,850
Selling, general and administrative 17,900 8,398 (372) (n)
- (m)
(626) (o) 25,300
Taxes other than income 3,689 2,041 5,730
Depreciation and amortization 13,509 6,604 (438) (p)
(89) (o)
2,296 (p)
1,766 (m) 23,648
------- ------ ------ -------
142,193 73,299 (1,964) 213,528
------- ------ ------ -------
Operating income 20,724 8,116 1,964 30,804
Equity in earnings of marine affiliates 1,490 278 (111) (q) 1,657
Interest expense (5,114) (4,148) (7,611) (r)
4,148 (s) (12,725)
------- ------ ------ -------
Earnings before taxes on income 17,100 4,246 (1,610) 19,736
Provision for taxes on income (6,497) (176) (234) (t)
(1,425) (u) (8,332)
------- ------ ------ -------
Net earnings $ 10,603 $ 4,070 $(3,269) $ 11,404
======= ====== ====== =======
Net earnings per share of common stock:
Basic $ .52 $ .46
======= =======
Diluted $ .52 $ .46
======= =======
Common stock outstanding:
Basic 20,230 4,384 (v) 24,614
Diluted 20,341 4,384 (v) 24,725
See accompanying notes to unaudited pro forma condensed combined financial statements.
</TABLE>
<PAGE> 32
KIRBY CORPORATION
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
The merger will be accounted for using the purchase method of accounting
with Kirby acquiring Hollywood. Under this method of accounting, Kirby will
record the assets and liabilities of Hollywood at fair market value as of the
date of closing, with the remaining purchase price reflected as goodwill.
The following notes set forth the explanations and assumptions used in
the preparation of the unaudited pro forma condensed combined financial
statements. The pro forma adjustments are based on the best estimate of
Kirby management using information currently available.
The preliminary pro forma allocation of the purchase price paid and the
financing of the transaction are summarized as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Estimated purchase price paid:
Common stock (4,384 shares at $20.44 per share) $ 89,586
Proceeds of bank debt issued for cash portion of purchase price
and repayment of Hollywood's June 30, 1999 existing debt 231,712
Estimated merger costs 3,500
-------
324,798
-------
Allocated to:
Historical book value of Hollywood's assets and liabilities
at June 30, 1999. 122,075
Adjust Hollywood's assets and liabilities to fair value:
Property 131,432
Other assets 2,067
Accrued liabilities (4,433)
Deferred income taxes (63,349)
Assets excluded from sale pursuant to merger agreement (772)
-------
Total allocation 187,020
-------
Goodwill (excess purchase price over allocation to identifiable
assets and liabilities) $137,778
=======
</TABLE>
<PAGE> 33
The following adjustments were made to the unaudited pro forma condensed
combined balance sheet pursuant to the purchase method of accounting:
(a) To record the goodwill associated with the merger.
(b) To adjust Hollywood's property to fair value.
(c) To record the pro forma deferred income tax effect of the merger.
(d) To reflect the issuance of new debt, and related debt issuance
costs, to finance the cash portion of the purchase price and the
estimated merger costs.
(e) To reflect the adjustment to the fair value for other liabilities
and record an accrual for estimated severance.
(f) To record the issuance of 4,384,000 shares of Kirby common stock
from treasury stock at a price of $20.44 per share. The price of
$20.44 per share was the average trading price of the stock on the
New York Stock Exchange during the 20 trading day period from
September 13, 1999 through October 8, 1999. The average price per
share of common stock held in Kirby's treasury was $16.67 per share
at October 11, 1999.
(g) To eliminate Hollywood's stockholder's equity accounts.
(h) To adjust Hollywood's equity investments to fair value.
(i) To adjust Hollywood's prepaid pension costs and the supplemental
executive retirement plan liability to the excess of the plan
assets at fair value over the projected benefit obligation.
(j) To adjust Hollywood's property for items excluded from the sale
pursuant to the merger agreement.
(k) To record the estimated fair value of Hollywood's existing debt
and the write off of existing deferred debt issue costs.
(l) To record estimated cash distribution to Hollywood's shareholders
prior to closing.
The following adjustments were made to the unaudited pro forma condensed
combined statements of earnings pursuant to the purchase method of
accounting:
(m) To adjust Hollywood's historical cost of sales and operating
expense, depreciation expense and minority interest expense to
conform Hollywood's equipment capitalization policy to that of
Kirby's.
(n) To reflect the cancellation of Hollywood's supplemental executive
retirement plan and deferred compensation benefit plans which will
not be offered by Kirby.
<PAGE> 34
(o) To adjust Hollywood's historical selling, general and
administrative expense and depreciation expense for items excluded
from sale pursuant to the merger agreement (see (j) above).
(p) To record pro forma depreciation and amortization expense on the
preliminary purchase price allocation to depreciable and
amortizable assets. Goodwill amortized over a period of 30 years
and property depreciated on the straight-line method over the
estimated useful lives of the assets as follows: marine
transportation equipment, 5-37 years; buildings and leasehold
improvements, 10-40 years; other equipment, 5-20 years.
(q) To adjust Hollywood's historical equity in earnings of marine
affiliates for the increase in the fair value of Hollywood's equity
investments.
(r) To reflect the increase in interest expense resulting from the
issuance of debt for the cash portion of the purchase price,
estimated merger costs and repayment of Hollywood's existing debt.
The interest rate on the new debt of $235.2 million is assumed to
be 6.40%. Debt issue costs of $.8 million are assumed to be
amortized over five years.
(s) To eliminate Hollywood's historical interest expense to reflect the
repayment of Hollywood's existing debt.
(t) To adjust the income tax effect on the pro forma pretax adjustments
after excluding nondeductible goodwill amortization, based on the
applicable statutory tax rate.
(u) To record the income tax effect at the federal statutory rate on
Hollywood's historical financials.
(v) To reflect the issuance of Kirby common stock pursuant to the
merger agreement.
<PAGE> 35
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Credit Agreement
<PAGE> 36
CREDIT AGREEMENT
among
KIRBY CORPORATION,
THE BANKS NAMED HEREIN,
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
as Administrative Agent,
BANK OF AMERICA, N.A.
as Syndication Agent,
BANK ONE, TEXAS, N.A.
as Documentation Agent,
FIRST UNION NATIONAL BANK,
as Co-Agent,
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
as Co-Agent,
and
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
as Co-Agent
BANC OF AMERICA SECURITIES LLC
Co-Lead Arranger and Book Manager
CHASE SECURITIES INC.
Co-Lead Arranger
Dated as of October 12, 1999
<PAGE> 37
Table of Contents
ARTICLE I DEFINITIONS, ETC.
Section 1.01. Certain Defined Terms
Section 1.02. Accounting Terms
Section 1.03. Computation of Time Periods
Section 1.04. References, Etc.
ARTICLE II COMMITMENTS AND TERMS OF CREDIT
Section 2.01. Commitments.
Section 2.02. Borrowing Procedures; Conversions and Continuations.
Section 2.03. The Notes.
Section 2.04. Reduction of the Commitments.
Section 2.05. Optional Prepayments
Section 2.06. Mandatory Prepayments and Repayment
Section 2.07. Interest Accrual, Payment, Etc.
Section 2.08. Payments and Computations.
Section 2.09. Fees.
Section 2.10. Setoff, Counterclaims and Taxes.
Section 2.11. Funding Losses
Section 2.12. Change of Law.
Section 2.13. Increased Costs.
Section 2.14. Substitution of Banks.
ARTICLE III CONDITIONS OF CREDIT
Section 3.01. Conditions Precedent to the Initial Borrowing.
Section 3.02. Conditions Precedent to All Borrowings.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence; Etc.
Section 4.02. Corporate Authority; Binding Obligations.
Section 4.03. No Conflict.
Section 4.04. No Consent.
Section 4.05. No Defaults or Violations of Law.
Section 4.06. Financial Position.
Section 4.07. Litigation.
Section 4.08. Use of Proceeds.
Section 4.09. Governmental Regulation.
Section 4.10. Disclosure.
Section 4.11. ERISA.
Section 4.12. Payment of Taxes.
Section 4.13. Title and Liens.
Section 4.14. Pari Passu Ranking.
Section 4.15. Environmental Matters.
Section 4.16. Year 2000.
Section 4.17. Citizenship.
<PAGE> 38
ARTICLE V AFFIRMATIVE COVENANTS
Section 5.01. Reporting Requirements.
Section 5.02. Taxes; Claims.
Section 5.03. Compliance with Laws.
Section 5.04. Insurance.
Section 5.05. Corporate Existence; Etc.
Section 5.06. Inspections; Etc.
Section 5.07. Maintenance of Properties.
Section 5.08. Accounting Systems; Etc.
Section 5.09. Contractual Obligations.
Section 5.10. Use of Loan Proceeds.
Section 5.11. Further Assurances in General.
Section 5.12. Year 2000.
ARTICLE VI NEGATIVE COVENANTS
Section 6.01. Financial Covenants.
Section 6.02. Restrictions on Debt.
Section 6.03. Restriction on Liens.
Section 6.04. Restrictions on Negative Pledge.
Section 6.05. Consolidated Subsidiaries Dispositions.
Section 6.06. Restrictions on Consolidated Subsidiary Distributions.
Section 6.07. Mergers and Acquisitions.
Section 6.08. Restricted Investments.
Section 6.09. Restricted Payments.
Section 6.10. Lines of Business.
Section 6.11. Transactions with Affiliates.
Section 6.12. Pari Passu Liens.
ARTICLE VII DEFAULT
Section 7.01. Events of Default.
Section 7.02. Setoff in Event of Default.
Section 7.03. No Waiver; Remedies.
ARTICLE VIII THE ADMINISTRATIVE AGENT
Section 8.01. Authorization and Action.
Section 8.02. Reliance, Etc.
Section 8.03. Chase and Affiliates.
Section 8.04. Bank Credit Decision.
Section 8.05. Indemnification.
Section 8.06. Employees of the Administrative Agent, Etc.
Section 8.07. Successor Administrative Agent.
Section 8.08. Notice of Default.
Section 8.09. Execution of Loan Documents.
Section 8.10. Syndication Agent, Documentation Agent,
Co-Agents, Co-Lead Arrangers and Book Manager.
<PAGE> 39
ARTICLE IX MISCELLANEOUS
Section 9.01. Amendments, Etc.
Section 9.02. Participation Agreements and Assignments.
Section 9.03. Notices.
Section 9.04. Costs and Expenses.
Section 9.05. Successors and Assigns.
Section 9.06. Independence of Covenants.
Section 9.07. Survival of Representations and Warranties.
Section 9.08. Severability.
Section 9.09. Captions.
Section 9.10. Limitation by Law.
Section 9.11. Counterparts.
Section 9.12. Governing Law.
Section 9.13. Limitation on Interest.
Section 9.14. Indemnification.
Section 9.15 Submission to Jurisdiction.
Section 9.16. WAIVER OF JURY TRIAL.
Section 9.17. FINAL AGREEMENT OF THE PARTIES.
<PAGE> 40
Annexes
- -------
Annex A Defined Terms
Schedules
- ---------
Schedule 2.01 Commitments
Schedule 4.01 Consolidated Subsidiaries and Excluded Affiliates
Schedule 9.03 Lending Offices and Address for Notices
Exhibits
- --------
Exhibit A Form of Borrowing Request
Exhibit B Form of Conversion/Continuation Notice
Exhibit C Form of Note
Exhibit D Form of Assignment and Acceptance
<PAGE> 41
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of October 12, 1999 (this "Agreement"
is among KIRBY CORPORATION, a Nevada corporation (the "Borrower"), the
banks named on the signature pages hereto (together with their respective
successors and assigns in such capacity, the "Banks"), CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as administrative agent for the Banks (together with
its successors and assigns in such capacity, the "Administrative Agent"),
BANK OF AMERICA, N.A., as syndication agent (the "Syndication Agent"), BANK
ONE, TEXAS, N.A., as documentation agent (the "Documentation Agent"), FIRST
UNION NATIONAL BANK, as Co-Agent, THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, as Co-Agent and WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, as Co-Agent. Unless otherwise defined herein, all capitalized
terms used herein and defined in Article I are used herein as so defined.
PRELIMINARY STATEMENT
The Borrower has requested that the Banks enter into this Agreement
and provide the Borrower with a $200,000,000 credit facility and the Bank
Group has agreed to do so upon terms and conditions set forth herein.
Accordingly, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto agree as follows:
ARTICLE I DEFINITIONS, ETC.
Section 1.01. Certain Defined Terms. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective
meanings set forth in Annex A hereto (such meanings to be equally
applicable to both singular and plural forms of the terms defined).
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the
preparation of the consolidated financial statements referred to in Section
4.06.
Section 1.03. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified
date, unless otherwise indicated, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
Section 1.04. References, Etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. All references herein to Sections, Annexes, Exhibits and
Schedules shall, unless the context requires a different construction, be
deemed to be references to the Sections of this Agreement and the Annexes,
Exhibits and Schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "including"
(and with correlative meaning "include") means including, without limiting
the generality of any description preceding such term. No provision of
this Agreement shall be interpreted or construed against any Person solely
because that Person or its legal representative drafted such provision.
<PAGE> 42
ARTICLE II COMMITMENTS AND TERMS OF CREDIT
Section 2.01. Commitments. (a) Each Bank severally agrees, on the
terms and conditions hereinafter set forth, to make loans to the Borrower
(the "Loans") from time to time on any Business Day during the period from
the Effective Date up to, but excluding, the Revolving Termination Date, in
an aggregate amount outstanding for such Bank not to exceed at any time
such Bank's Commitment. Subject to the terms and conditions of this
Agreement until the Revolving Termination Date, the Borrower may borrow,
repay pursuant to Section 2.07 or prepay pursuant to Section 2.07 and
reborrow under this Section 2.01 (a).
(b) Each Base Rate Borrowing shall consist of Base Rate Loans
made on the same day by the Banks ratably according to their respective
Commitment Percentages, and Base Rate Borrowings may be in any amount.
Each Fixed Rate Borrowing shall be in an aggregate amount not less than
$1,000,000 or an integral multiple of $500,000.00 in excess thereof, and
shall consist of Fixed Rate Loans of the same Type made on the same day by
the Banks ratably according to their respective Commitment Percentages.
Borrowings of more than one Type may be outstanding at the same time, but
the Borrower shall not be entitled to request any Borrowing or to Convert
Loans comprising any Borrowing into Loans of another Type, if after giving
effect to such Borrowing or Conversion, as the case may be, any Bank would
have outstanding at any one time more than six (6) different Types of
Loans.
(c) Notwithstanding any other term or provision hereof no Loan
shall be made if after giving effect thereto the aggregate principal amount
of Loans outstanding would exceed the Total Commitment.
Section 2.02. Borrowing Procedures; Conversions and Continuations.
(a) Each Borrowing shall be made upon the written, telecopied or facsimile
transmitted request of the Borrower, given to the Administrative Agent not
later than 10:00 a.m. (Houston time) on (i) the third Business Day prior to
the proposed Borrowing Date in the case of a Eurodollar Rate Borrowing,
(ii) the second Business Day prior to the proposed Borrowing Date in the
case of an Adjusted CD Rate Borrowing or (iii) the Business Day immediately
preceding the proposed Borrowing Date in the case of a Base Rate Borrowing,
and upon receipt the Administrative Agent shall give each other member of
the Bank Group prompt notice of such request by telecopier, telex or cable.
Each request for a Borrowing (a "Borrowing Request") made by the Borrower
shall be in substantially the form of Exhibit A, specifying therein (A) the
Borrowing Date for such Borrowing, (B) the Type of Loans comprising such
Borrowing, (C) the aggregate amount of such Borrowing, and (D) in the case
of a Fixed Rate Borrowing, the Interest Period for the Loans comprising
such Borrowing. Each Bank shall, before 11:30 a.m. (Houston time) on the
date of such Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent at its address referred to in
Section 9.03, in same day funds, such Bank's ratable portion of such
Borrowing. After the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the Borrower at the
Administrative Agent's aforesaid address. Each Borrowing Request shall be
irrevocable and binding on the Borrower.
<PAGE> 43
(b) Unless the Administrative Agent shall have received notice
from a Bank prior to any Borrowing Date that such Bank will not make
available to the Administrative Agent such Bank's ratable portion of such
Borrowing, the Administrative Agent may assume that such Bank has made such
portion available to the Administrative Agent on such Borrowing Date in
accordance with Section 2.02(a) and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such
Borrowing Date a corresponding amount. If and to the extent that such Bank
shall not have so made such ratable portion available to the Administrative
Agent, such Bank and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall repay to
the Administrative Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan as part of such Borrowing for purposes of
this Agreement. The failure of any Bank to make the Loan to be made by it
as part of any Borrowing shall not relieve any other Bank of its
obligation, if any, hereunder to make its Loan on such Borrowing Date or
any subsequent Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on
the date of any Borrowing.
(c) The Borrower may, subject to the terms of this Agreement, on
any Business Day, upon written or facsimile transmitted notice to the
Administrative Agent, given not later than 10:00 a.m. (Houston time) on
(i) the third Business Day prior to the proposed Conversion Date in the
case of a Conversion of Loans into Eurodollar Rate Loans, (ii) the second
Business Day prior to the proposed Conversion Date in the case of a
Conversion of Loans into Adjusted CD Rate Loans or (iii) the Business Day
immediately preceding the proposed Conversion Date in the case of a
Conversion of Loans into Base Rate Loans, Convert some or all Loans
comprising one or more Borrowings into Loans of another Type comprising one
or more Borrowings, and the Administrative Agent shall promptly transmit
the contents of such notice to each other member of the Bank Group by
telecopier, telex or cable. Each notice of a Conversion (a "Conversion
Notice") given by the Borrower shall be in substantially the form of
Exhibit B, specifying therein (A) the Conversion Date for such Conversion,
(B) the Loans to be Converted, (C) the Type of Loans to which such Loans
are to be Converted and (D) in the case of a Conversion into Fixed Rate
Loans, the Interest Period for such Converted Loans. Notwithstanding any
other term or provision hereof, after giving effect to any such Conversion,
the size of all Borrowings outstanding hereunder and the number of
different Types of Loans outstanding hereunder shall conform to the
requirements of Section 2.01. In the event of any Conversion of Fixed Rate
Loans on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall be obligated to reimburse the Banks in respect
thereof pursuant to Section 2.11. If the Borrower shall fail to give a
timely Conversion Notice conforming to the requirements of this Agreement
with respect to any Fixed Rate Loans prior to the expiration of the
Interest Period applicable thereto, such Fixed Rate Loans shall,
automatically on the last day of such Interest Period, be Converted into
Base Rate Loans.
<PAGE> 44
(d) The Borrower may, subject to the terms of this Agreement, on
any Business Day, upon written or facsimile transmitted notice to the
Administrative Agent, given not later than 11:00 a.m. (Houston time) on (i)
the third Business Day prior to the proposed Continuation Date in the case
of a continuation of Eurodollar Rate Loans, or (ii) the second Business Day
prior to the proposed Continuation Date in the case of a continuation of
Adjusted CD Rate Loans, elect as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods that expire on such
day (or any part thereof in an amount not less than $1,000,000 or that is
in an integral multiple of $500,000.00 in excess thereof). Each notice of
a continuation (a "Continuation Notice") given by the Borrower shall be in
substantially the form of Exhibit B.
Section 2.03. The Notes. The Loans made by each Bank shall be
evidenced by a single Note issued to such Bank by the Borrower (a) dated
the date of this Agreement (or such other date as may be specified in
Section 9.02), (b) payable to the order of such Bank in a principal amount
equal to such Bank's Commitment and (c) otherwise duly completed. Each
Loan made by a Bank to the Borrower and all payments made on account of the
principal amount thereof shall be entered by such Bank in its records or on
the schedule (or a continuation thereof) attached to the Note of such Bank,
provided, however, that prior to any transfer of any such Note, such Bank
shall endorse the amount and maturity of any outstanding Loans on the
schedule (or a continuation thereof) attached to such Note.
Section 2.04. Reduction of the Commitments. The Borrower shall have
the right, upon at least three Business Days' notice to the Administrative
Agent to terminate in whole or reduce ratably in part the unused portions
of the respective Commitments of the Banks, provided, that each partial
reduction shall be in the aggregate amount of $1,000,000 or an integral
multiple of $1,000,000 in excess thereof. Once reduced in accordance with
this Section, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Commitment
Percentage. All accrued commitment fees to, but not including, the
effective date of any reduction or termination of Commitments, shall be
paid on the effective date of such reduction or termination.
Section 2.05. Optional Prepayments. The Borrower may, from time to
time on any Business Day, upon at least one Business Day's notice to the
Administrative Agent stating the proposed date and aggregate principal
amount thereof, and if such notice is given, the Borrower shall, prepay the
outstanding principal amount of the Base Rate Loans comprising part of the
same Borrowing in whole or ratably in part; provided, that any partial
prepayment of such Base Rate Loans shall be in an aggregate principal
amount of not less than $ 100,000. The Borrower may from time to time upon
at least three Business Days' notice to the Administrative Agent stating
the proposed date and the aggregate principal amount thereof, and if such
notice is given, the Borrower shall, prepay the outstanding principal
amount of the Fixed Rate Loans comprising part of the same Borrowing in
whole or ratably in part; provided, that any partial prepayment of such
Fixed Rate Loans shall be in an aggregate principal amount of not less than
$2,000,000 or an integral multiple of $1,000,000 in excess thereof. During
the Availability Period, the Borrower may apply any optional prepayment of
the Loans to such portions of the Loans as the Borrower may elect. Each
<PAGE> 45
prepayment of Fixed Rate Loans shall be accompanied by a payment of accrued
interest to the date of such prepayment on the principal amount prepaid.
Each prepayment in full of Base Rate Loans shall be accompanied by a
payment of accrued interest to the date of such prepayment on the principal
amount prepaid. In the event of any prepayment of a Fixed Rate Loan, the
Borrower shall be obligated to reimburse the Banks in respect thereof
pursuant to Section 2.11. Prepayments of Loans made after the Revolving
Termination Date shall be applied in inverse order of maturity.
Section 2.06. Mandatory Prepayments and Repayment. (a) Mandatory
Prepayments. (i) In the event the Borrower issues any Debt of the type
described in clause (a) or (b) of the definition of Debt set forth in this
Agreement (whether public or privately placed) during the Availability
Period, the Total Commitment shall be reduced by the principal amount of
such Debt and the Borrower shall make the prepayment required by Subsection
(a)(ii) of this Section 2.06. If such Debt is issued after the
Availability Period, the Borrower shall make a prepayment of the principal
of the Loans in an amount equal to the principal amount of such Debt, and
such prepayment shall be made on the date such Debt is issued.
Notwithstanding the foregoing, no prepayment shall be required pursuant to
this Section 2.06(a) to the extent that the proceeds of such Debt are used,
at the time of issuance thereof, for the purpose of consummating an
Acquisition that is permitted under this Agreement.
(ii) The Borrower shall from time to time prepay the Loans
in such amounts as shall be necessary so that at all times the aggregate
amount of Loans outstanding shall not be in excess of the Total Commitment.
Any prepayment required by this Section 2.06(a) shall be due on the date
such prepayment accrues pursuant to the preceding sentence.
(iii) Each prepayment of Fixed Rate Loans shall be
accompanied by a payment of accrued interest to the date of such prepayment
on the principal amount prepaid. Each prepayment in full of Base Rate
Loans shall be accompanied by a payment of accrued interest to the date of
such prepayment on the principal amount prepaid. In the event of any
prepayment of a Fixed Rate Loan, the Borrower shall be obligated to
reimburse the Banks in respect thereof pursuant to Section 2.11. Unless
otherwise specified by the Borrower, all mandatory prepayments of the Loans
shall first be applied to Base Rate Borrowings, and second to such Fixed
Rate Borrowings as the Administrative Agent may select. Prepayments of
Loans made after the Revolving Termination Date shall be applied in inverse
order of maturity.
(b) Repayment of Loans. The principal balance of the Loans
outstanding on the Revolving Termination Date shall be payable by the
Borrower in quarterly principal payments of $12,500,000.00 each together
with accrued interest thereon, with the first such payment due on the date
that is two years after the Revolving Termination Date and each subsequent
payment due every three (3) months thereafter. The outstanding Loans shall
be fully due and payable on the Maturity Date, together with any unpaid
interest accrued thereon.
<PAGE> 46
Section 2.07. Interest Accrual, Payment, Etc. (a) Subject to the
provisions of Section 9.13, the Borrower shall pay interest on the unpaid
principal amount of each Loan made by each Bank from the date of such Loan
until such principal amount shall be paid in full, at the rates per annum
specified as follows:
(i) if such Loan is a Base Rate Loan, a rate per annum
equal to the lesser of (A) the Highest Lawful Rate and (B) the
Base Rate in effect from time to time plus the Applicable Amount
in effect from time to time, and unpaid accrued interest on such
Loans shall be paid on each Interest Payment Date and the date
such Base Rate Loan shall be paid in full;
(ii) if such Loan is an Adjusted CD Rate Loan, a rate
per annum equal at all times during the Interest Period for such
Loan to the lesser of (A) the Highest Lawful Rate and (B) the sum
of the Adjusted CD Rate for such Interest Period plus the
Applicable Amount in effect as of the first day of such Interest
Period and unpaid accrued interest on such Loans shall be payable
on each Interest Payment Date; or
(iii) if such Loan is a Eurodollar Rate Loan, a
rate per annum equal at all times during the Interest Period for
such Loan to the lesser of (A) the Highest Lawful Rate and (B)
the sum of the Eurodollar Rate for such Interest Period plus the
Applicable Amount in effect as of the first day of such Interest
Period, and unpaid accrued interest on such Loans shall be
payable on each Interest Payment Date.
Any amount of principal or, to the extent permitted by applicable law,
interest which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, at a rate per annum (the
"Default Rate") equal at all times to the lesser of (A) the Highest Lawful
Rate and (B) the Base Rate in effect from time to time during the
applicable period plus the Applicable Amount in effect from time to time
during such period plus two percent (2%), payable on demand.
(b) The Borrower shall pay to each Bank additional interest on
the unpaid principal amount of each Eurodollar Rate Loan of such Bank, from
the date of such Loan until such principal amount is paid in full, at an
interest rate per annum equal at all times to the remainder obtained by
subtracting (i) the Eurodollar Rate for the Interest Period for such Loan
from (ii) the rate obtained by dividing such Eurodollar Rate by a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of
such Bank for such Interest Period, payable on each date on which interest
is payable on such Loan. Such additional interest shall be calculated by
such Bank and notified to the Borrower (together with a copy of such Bank's
calculations) through the Administrative Agent.
(c) (i) The Administrative Agent shall give prompt notice to
the Borrower and each other member of the Bank Group of the applicable
interest rate determined by the Administrative Agent hereunder for each
Borrowing. Each determination by the Administrative Agent (or, in the case
of Section 2.07(b), by a Bank) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
<PAGE> 47
(ii) If one or more Banks holding aggregate Commitment
Percentages of at least fifty percent (50%) shall, at least one Business
Day before the date of any requested Eurodollar Rate Borrowing, notify the
Administrative Agent that the Eurodollar Rate applicable to such Borrowing
will not adequately reflect the cost to such Banks of making, funding or
maintaining their respective Eurodollar Rate Loans for such Borrowing, the
right of the Borrower to select Eurodollar Rate Loans for such Borrowing or
any subsequent Borrowing shall be suspended until the Administrative Agent
shall notify the Borrower and each other member of the Bank Group that the
circumstances causing such suspension no longer exist, and each Loan
comprising such Borrowing shall be made as, or Converted into, as
applicable, a Base Rate Loan.
(iii) If the Administrative Agent is unable to determine
the Adjusted CD Rate in accordance with the definition thereof for any
Adjusted CD Rate Borrowing or the Eurodollar Rate in accordance with the
definition thereof for any Eurodollar Rate Borrowing, (A) the
Administrative Agent shall forthwith notify the Borrower and each other
member of the Bank Group that the interest rate cannot be determined for
such Adjusted CD Rate Borrowing or Eurodollar Rate Borrowing, as the case
may be, (B) each Adjusted CD Rate Borrowing or Eurodollar Rate Borrowing,
as the case may be, previously requested but not yet funded or Converted,
as applicable, will automatically be made as or Converted into, as
applicable, a Base Rate Borrowing, and (C) the obligation of the Banks to
make Adjusted CD Rate Loans or Eurodollar Rate Loans, as the case may be,
shall be suspended until the Administrative Agent shall notify the Borrower
and each other member of the Bank Group that the circumstances causing such
suspension no longer exist.
Section 2.08. Payments and Computations. (a) All payments of
principal, interest, commitment fees and other amounts payable to the Banks
under the Loan Documents shall be made in Dollars to the Administrative
Agent at its address specified in Section 9.03 for the account of each of
the Banks, in immediately available funds not later than 12:00 Noon
(Houston time) on the date when due. Upon receipt of such payments, the
Administrative Agent will promptly cause to be distributed like funds
relating to the payment of principal or interest or commitment fees ratably
(other than amounts payable pursuant to Section 2.07(b), Section 2.10,
Section 2.11, Section 2.12 or Section 2.13) to the Banks for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Bank to such Bank for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. In the event the
Administrative Agent receives any such payment in immediately available
funds not later than 12:00 Noon (Houston time) on any Business Day, but
fails to distribute to any Bank entitled thereto like funds relating to
such payment by the close of business on such Business Day, then the
Administrative Agent shall pay such Bank interest thereon at the Federal
Funds Rate for each day from the date such amount is received by the
Administrative Agent until the date distributed to such Bank.
<PAGE> 48
(b) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Banks under the Loan Documents that the Borrower will not make such payment
in full, the Administrative Agent may assume that the Borrower has made
such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount
then due such Bank. If and to the extent the Borrower shall not have made
such payment in full to the Administrative Agent each Bank shall repay to
the Administrative Agent forthwith on demand such amount distributed to
such Bank, together with interest thereon for each day from the date such
amount is distributed to such Bank until the date such Bank repays such
amount to the Administrative Agent at the Federal Funds Rate.
(c) All computations of interest based on the Base Rate shall be
made on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Adjusted CD Rate, the Eurodollar
Rate, the Federal Funds Rate, or Section 2.07(b), as well as commitment
fees and utilization fees, shall be made on the basis of a year of 360 days
(unless use of a 360 day year would cause the interest contracted for,
charged or received hereunder to exceed the Highest Lawful Rate, in which
case such computations shall be made on the basis of a year of 365 or 366
days, as the case may be), in each case for the actual number of days
(including the first day but excluding the last day) occurring in the
period for which such interest or commitment fees are payable.
(d) Whenever any payment under the Loan Documents shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of payment of interest or
commitment fee, as the case may be; provided, however, if such extension
would cause payment of interest on or principal of Eurodollar Rate Loans to
be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
(e) If any Bank shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of setoff, or otherwise) on
account of the Loans made by it (other than pursuant to Section 2.07(b),
Section 2.10, Section 2.11, Section 2.12 or Section 2.13) in excess of its
ratable share of payments on account of the Loans obtained by all the
Banks, such Bank shall forthwith purchase from the other Banks such
participations in the Loans made by such other Banks as shall be necessary
to cause such purchasing Bank to share the excess payment ratably with each
of them. The Borrower agrees that any Bank so purchasing a participation
from another Bank pursuant to this Section 2.08(e) may, to the fullest
extent permitted by law and this Agreement, exercise all its rights of
payment (including the right of setoff) with respect to such participation
as fully as if such Bank were the direct creditor of the Borrower in the
amount of such participation.
<PAGE> 49
Section 2.09. Fees. (a) The Borrower shall pay to the Administrative
Agent for the account of each Bank pro rata according to its Commitment
Percentage, a commitment fee equal to the Applicable Amount on the average
unused portion of the Commitment of such Bank as in effect from time to
time for the period from the date hereof to, but excluding, the Revolving
Termination Date. Accrued commitment fees shall be due and payable in
arrears on each Quarterly Payment Date in each year, on the date of any
reduction or termination of the Commitment of such Bank and on the
Revolving Termination Date, and shall be computed for the period commencing
with the day to which such fee was last paid (or, in the case of the first
commitment fee payment date, for the period commencing with and including
the date hereof to the date such fee is due and payable).
(b) The Borrower shall pay to the Administrative Agent for the
account of each Bank pro rata, according to its Commitment Percentage, a
utilization fee equal to the utilization fee set forth in the definition of
Applicable Amount times the outstanding Loans, for each day during the term
hereof that the outstanding Loans exceed 33% of the Total Commitment. If
there is any change in the Applicable Amount during any quarter, the
outstanding Loans shall be computed and multiplied by the Applicable Amount
separately for each period that such Applicable Amount was in effect during
such quarter. Such utilization fee shall accrue from the Effective Date to
the Maturity Date and shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter and on the Maturity Date.
(c) Subject to the provisions of Section 9.13, the Borrower
shall pay to the Administrative Agent the fees specified in that certain
letter agreement dated October 1, 1999 between the Administrative Agent and
the Borrower concerning the same (the "Administrative Agent's Fee Letter")
and shall pay to the Syndication Agent the fees specified in that certain
letter agreement dated September 9, 1999 between the Syndication Agent and
the Borrower (the "Syndication Agent's Fee Letter"). All payments by the
Borrower of the fees payable to the Administrative Agent and the
Syndication Agent pursuant to the Administrative Agent's Fee Letter and the
Syndication Agent's Fee Letter, respectively, shall be made in Dollars
directly to the Administrative Agent or to the Syndication Agent, as
applicable at its address specified in Section 9.03 in immediately
available funds not later than 12:00 Noon (Houston time) on the date when
due.
Section 2.10. Setoff, Counterclaims and Taxes. (a) All payments of
principal, interest, expenses, reimbursements, compensation, commitment
fees, letter of credit fees, arrangement fees or administration fees and
any other amount from time to time due under any Loan Document shall be
made by the Borrower without setoff or counterclaim and shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each member of the Bank
Group, taxes imposed on its income (or a taxable base in the nature of net
income, or, in lieu of taxes so imposed or measured, on overall gross
receipts and capital), and franchise taxes imposed on it, by the
jurisdiction under the laws of which such member of the Bank Group is
organized or any political subdivision thereof and, in the case of each
Bank, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction of such Bank's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
<PAGE> 50
referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable under any Loan
Document to any member of the Bank Group, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.10) such member of the Bank Group receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law; provided that the Borrower shall not be
required to pay any increased amount on account of Taxes to the extent that
any such Bank shall not have furnished the Borrower with such forms, or
shall not have taken such other action, as reasonably may be available to
it under applicable tax laws and any applicable tax treaty to obtain an
exemption from, or reduction of, such Taxes.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery or registration of, or otherwise
with respect to, any Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each member of the Bank Group
for the full amount of Taxes or Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under this Section 2.10) paid by such member of the Bank Group (whether
paid on its own behalf or on behalf of any other member of the Bank Group)
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall be made
within 30 days from the date such member of the Bank Group makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred
to in Section 9.03, the original or a certified copy of a receipt
evidencing payment thereof. If no Taxes are payable in respect of any
payment made under any Loan Document, upon the request of the
Administrative Agent, the Borrower will furnish to the Administrative
Agent, at its address referred to in Section 9.03, a certificate from each
appropriate taxing authority, or an opinion of counsel acceptable to the
Administrative Agent, in either case stating that such payment is exempt
from or not subject to Taxes.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.10 shall survive the payment in full of the
Loans and all other amounts owing under the other Loan Documents. The
provisions of this Section 2.10 are in all respects subject to Section 9.13
hereof.
<PAGE> 51
(f) Each Bank represents and warrants to the Administrative
Agent, the Administrative Agent and the Borrower that such Bank is either
(i) a corporation organized under the laws of the United States, a state
thereof or the District of Columbia, or (ii) entitled to complete exemption
from United States withholding tax imposed on or with respect to any
payments, including fees, to be made to it pursuant to this Agreement and
the other Loan Documents (x) under an applicable provision of a tax
convention or treaty to which the United States is a party or (y) because
it is acting through a branch, agency or office in the United States and
any payment to be received by it hereunder is effectively connected with a
trade or business in the United States. Upon becoming a party to this
Agreement (whether by assignment or as an original signatory hereto), and
in any event, from time to time upon the request of the Administrative
Agent or the Borrower, each Bank which is not a corporation organized under
the laws of the United States or any state thereof or the District of
Columbia shall deliver to the Administrative Agent and the Borrower such
forms, certificates or other instruments as may be required by the
Administrative Agent in order to establish that such Bank is entitled to
complete exemption from United States withholding taxes imposed on or with
respect to any payments, including fees, to be made to such Bank under this
Agreement and the other Loan Documents. Each Bank also agrees to deliver
to the Borrower, the Administrative Agent such other supplemental forms as
may at any time be required as a result of the passage of time or changes
in applicable law or regulation in order to confirm or maintain in effect
its entitlement to exemption from U.S. withholding tax on any payments
hereunder; provided, that the circumstances of the Bank at the relevant
time and applicable laws permit it to do so. If a Bank determines, as a
result of any change in either (1) applicable law, regulation or treaty, or
in any official application thereof or (2) its circumstances, that it is
unable to submit any form or certificate that it is obligated to submit
pursuant to this Section 2.10(f), or that it is required to withdraw or
cancel any such form or certificate previously submitted, it shall
promptly notify the Borrower, the Administrative Agent such fact. If a
Bank is organized under the laws of a jurisdiction outside the United
States, and the Borrower and the Administrative Agent have not received
forms, certificates or other instruments indicating to their satisfaction
that all payments to be made to such Bank, hereunder are not subject to
United States withholding tax or the Administrative Agent otherwise has
reason to believe that such Bank is subject to U.S. withholding tax, the
Borrower shall withhold taxes from such payments at the applicable
statutory rate. Each Bank shall indemnify and hold the Borrower and the
Administrative Agent harmless from any United States taxes, penalties,
interest and other expenses, costs and losses incurred or payable by them
as a result of either (A) such Bank's failure to submit any form or
certificate that it is required to provide pursuant to this Section 2.10(f)
or (B) reliance by the Borrower or the Administrative Agent on any such
form or certificate which such Bank has provided to them pursuant to this
Section 2.10(f).
(g) Any Bank claiming any additional amounts payable pursuant to
this Section 2.10 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by
the Borrower or to change the jurisdiction of its Applicable Lending Office
if such a filing or change would avoid the need for or reduce the amount of
any such additional amounts which may thereafter accrue and would not, in
the sole determination of such Bank, be otherwise disadvantageous to such
Bank.
<PAGE> 52
Section 2.11. Funding Losses. The Borrower shall indemnify each
member of the Bank Group against any loss or reasonable expense (including,
but not limited to, any loss or reasonable expense sustained or incurred or
to be sustained or incurred in liquidating or reemploying deposits from
third parties acquired to effect or maintain such Loan or any part thereof
as a Fixed Rate Loan) which such Person may sustain or incur as a
consequence of (a) any failure by the Borrower to fulfill on the date of
any Borrowing hereunder the applicable conditions set forth in Article III,
(b) any failure by the Borrower to borrow hereunder or to Convert Loans
hereunder after a Borrowing Request or Conversion Notice, respectively, has
been given, (c) any payment, prepayment or Conversion of a Fixed Rate Loan
required or permitted by any other provisions of this Agreement, including,
without limitation, payments made due to the acceleration of the maturity
of the Loans pursuant to Section 7.01, or otherwise made on a date other
than the last day of the applicable Interest Period, (d) any default in the
payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by notice of prepayment or otherwise) or (e) the
occurrence of an Event of Default. Such loss or reasonable expense shall
include, without limitation, an amount equal to the excess, if any, as
determined by each Bank of (i) its cost of obtaining the funds for the Loan
being paid, prepaid or Converted or not borrowed or Converted (based on the
Fixed Rate applicable thereto) for the period from the date of such
payment, prepayment or Conversion or failure to borrow or Convert to the
last day of the Interest Period for such Loan (or, in the case of a failure
to borrow or Convert, the Interest Period for the Loan which would have
commenced on the date of such failure to borrow or Convert) over (ii) the
amount of interest (as estimated by such Bank) that would be realized by
such Bank in reemploying the funds so paid, prepaid or Converted or not
borrowed or Converted for such period or Interest Period, as the case may
be. A certificate of each member of the Bank Group setting forth any
amount or amounts which such Person is entitled to receive pursuant to this
Section 2.11 shall be delivered to the Borrower (with a copy to the
Administrative Agent) and shall be conclusive, if made in good faith,
absent manifest error. The Borrower shall pay to the Administrative
Agent for the account of each such Person the amount shown as due on any
certificate within 30 days after its receipt of the same. Notwithstanding
the foregoing, in no event shall any Bank be permitted to receive any
compensation hereunder constituting interest in excess of the Highest
Lawful Rate. Without prejudice to the survival of any other obligations of
the Borrower hereunder, the obligations of the Borrower under this Section
2.11 shall survive the termination of this Agreement and/or the payment or
assignment of any of the Notes.
<PAGE> 53
Section 2.12. Change of Law. (a) If at any time any Bank determines
in good faith (which determination shall be conclusive) that any change in
any applicable law, rule or regulation or in the interpretation,
application or administration thereof makes it unlawful, or any central
bank or other Governmental Authority asserts that it is unlawful, for such
Bank or its foreign branch or branches to fund or maintain any Eurodollar
Rate Loan (any of the foregoing determinations being a "Eurodollar Event"),
then, such Bank, at its option, may: (i) declare that Eurodollar Rate Loans
will no longer be made or maintained by such Bank, whereupon the right of
the Borrower to select Eurodollar Rate Loans for any Borrowing shall be
suspended until such Bank shall notify the Administrative Agent that the
circumstances causing such Eurodollar Event no longer exist; (ii) with
respect to any Eurodollar Rate Loans of such Bank then outstanding, require
that all such Eurodollar Rate Loans be Converted to Base Rate Loans, in
which event all such Eurodollar Rate Loans shall automatically be Converted
into Base Rate Loans on the effective date of notice of such Eurodollar
Event and all payments or prepayments of principal that would have
otherwise been applied to repay such Converted Eurodollar Rate Loans shall
instead be applied to repay the Base Rate Loans resulting from such
Conversion; and/or (iii) with respect to any Eurodollar Rate Loans
requested of such Bank but not yet made as or Converted into such, require
that such Eurodollar Rate Loans be made as or Converted into, as
applicable, Base Rate Loans.
(b) Upon the occurrence of any Eurodollar Event, and at any time
thereafter so long as such Eurodollar Event shall continue, such Bank may
exercise its aforesaid option by giving written notice thereof to the
Administrative Agent and the Borrower, such notice to be effective upon
receipt thereof by the Borrower. Any Conversion of any Eurodollar Rate
Loan which is required under this Section 2.12 shall be made, together with
accrued and unpaid interest and all other amounts payable to such Bank
under this Agreement with respect to such Converted Loan (including,
without limitation, amounts payable pursuant to Section 2.11 hereof), on
the date stated in the notice to the Borrower referred to above.
Section 2.13. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline issued or request made
after the Effective Date by any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any
increase in the cost to any Bank of agreeing to make or making, funding or
maintaining Adjusted CD Rate Loans or Eurodollar Rate Loans, then the
Borrower shall from time to time, subject to the provisions of Section
9.13, pay to the Administrative Agent for the account of such Bank
additional amounts sufficient to compensate such Bank for such increased
cost upon demand by such Bank.
(b) If any Bank shall have determined in good faith that any
law, rule, regulation or guideline adopted pursuant to or arising out of
the July 1988 report of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards" and becoming applicable to such Bank
after the Effective Date, or that the adoption after the Effective Date of
any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or in the interpretation or
<PAGE> 54
administration thereof by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or compliance by
such Bank (or any lending office of such Bank) with any request or
directive regarding capital adequacy (whether or not having the force of
law) issued after the Effective Date by any such Governmental Authority or
comparable agency, affects or would affect the amount of capital required
or expected to be maintained by such Bank or any corporation controlling
such Bank and that the amount of such capital is increased by or based upon
the existence of such Bank's Commitment hereunder and other commitments of
this type, then the Borrower shall from time to time, subject to the
provisions of Section 9.13, pay to such Bank upon demand additional amounts
sufficient to compensate such Bank or such corporation in the light of such
circumstances, to the extent that such Bank reasonably determines such
increase in capital to be allocable to the existence of such Bank's
Commitment hereunder and similar amounts are being charged generally to
other borrowers with similar commitments from such Bank.
(c) Each Bank will notify the Borrower of any event occurring
after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section 2.13 as promptly as practicable after
such Bank obtains knowledge of the occurrence of such event. In no event
shall the Borrower be obligated to compensate any Bank pursuant to this
Section 2.13 for any amounts described in paragraphs (a) or (b) above that
accrued more than one hundred eighty (180) days prior to the date the
notice described in the preceding sentence is given by the party requesting
such compensation, but the foregoing shall in no way limit the right of
such Bank to request compensation for amounts accrued during such one
hundred eighty (180) day period or any future period. A certificate of
such Bank setting forth in reasonable detail (i) such amount or amounts as
shall be necessary to compensate such Bank (or participating banks or other
entities pursuant to Section 9.02) as specified above and (ii) the
calculation of such amount or amounts shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay to
such Bank the amount shown as due on any such certificate within thirty
(30) days after its receipt of the same. The failure of any Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver
of the right of such Bank or any other Bank, to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction
in return on capital. The protection of this Section 2.13 shall be
available to the Banks regardless of any possible contention of invalidity
or inapplicability of law, regulation or condition which shall have been
imposed.
Section 2.14. Substitution of Banks. If one or more Banks requests
compensation pursuant to Section 2.13 or declares a Eurodollar Event
pursuant to Section 2.12 or the Borrower is required to deduct United
States withholding taxes pursuant to Section 2.10(f) from amounts payable
to one or more Banks under the Loan Documents (any such request,
declaration or withholding is herein called a "Substitution Event" and any
such Bank is herein called an "Affected Bank") the Borrower may give notice
to such Affected Bank (with a copy to the Administrative Agent) that it
wishes to seek one or more Eligible Assignees (which may be one or more of
the other Banks) to assume the Commitment of such Affected Bank and to
purchase the Loans of such Affected Bank and the other interests of such
<PAGE> 55
Affected Bank in the Loan Documents (collectively, the "Affected
Interests"). Each Affected Bank agrees to sell all of its Affected
Interests pursuant to Section 9.02 to any such Eligible Assignee for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on the Loans of such Affected Bank and all commitment fees and
other fees and amounts due such Affected Bank under the Loan Documents,
calculated, in each case, to the date such Affected Interests are
purchased, whereupon such Affected Bank shall have no further Commitment or
other obligation to the Borrower under the Loan Documents. Notwithstanding
the foregoing, the Borrower may not replace any Affected Bank if (a) the
Bank or Banks involved in such Substitution Event have aggregate Commitment
Percentages in excess of thirty five percent (35%) or (b) the Borrower does
not seek to replace each Bank involved in such Substitution Event.
ARTICLE III CONDITIONS OF CREDIT
Section 3.01. Conditions Precedent to the Initial Borrowing. The
obligation of each Bank to make its initial Loan on the occasion of the
initial Borrowing hereunder is subject to the conditions precedent that the
Administrative Agent shall have received on or before the date of such
initial Borrowing all of the following, each dated (unless otherwise
indicated) on or about the date hereof, in form and substance reasonably
satisfactory to the Bank Group and in such number of counterparts as may be
reasonably requested by the Administrative Agent:
(a) The following Loan Documents duly executed by the Persons
indicated below:
(i) this Agreement executed by the Borrower and each
member of the Bank Group,
(ii) the Notes executed by the Borrower,
(iii) the Administrative Agent's Fee Letter
executed by the Borrower and the Administrative Agent,
(iv) the Syndication Agent's Fee Letter executed by the
Borrower and the Syndication Agent; and
(v) the Joint Letter executed by the Borrower, the
Administrative Agent and the Syndication Agent.
(b) A certificate of a Responsible Officer and of the secretary
or an assistant secretary of the Borrower certifying, inter alia, (i) true
and correct copies of resolutions adopted by the Board of Directors of the
Borrower (A) authorizing the transactions contemplated hereby, (B)
authorizing officers of the Borrower to execute and deliver the Loan
Documents to which it is or will be a party and any related documents, (ii)
true and correct copies of the articles of incorporation and bylaws (or
other similar charter documents) of the Borrower and (iii) the incumbency
and specimen signatures of the officers of the Borrower executing any
documents on behalf of it.
<PAGE> 56
(c) A certificate of a Responsible Officer of the Borrower
certifying that: (i) the representations and warranties contained in
Article IV are true and correct on and as of such date, as though made on
and as of such date; (ii) no Default or Event of Default exists; and (iii)
there has occurred since December 31, 1998, no Material Adverse Effect with
respect to the Borrower or any Material Subsidiary.
(d) The favorable, signed opinion of Jenkens & Gilchrist, a
Professional Corporation, special counsel to the Borrower, addressed to the
Bank Group, in form and substance reasonably satisfactory to the Bank
Group.
(e) Certificates of appropriate public officials as to the
existence and good standing of the Borrower in the States of Nevada and
Texas.
(f) The payment to the Bank Group of the fees due to them as of
such date under the Loan Documents, the payment to the Syndication Agent of
the fees due to it as of such date under the Syndication Agent's Fee
Letter, the payment to the Administrative Agent of the fees due to it as of
such date under the Administrative Agent's Fee Letter, and the payment of
all legal fees and expenses of Haynes and Boone, LLP, special counsel to
the Syndication Agent, in connection with the preparation of this Agreement
and the other Loan Documents and the closing of this transaction.
(g) Such other documents, certificates and opinions as the
Administrative Agent may reasonably request relating to this Agreement and
the other Loan Documents.
Section 3.02. Conditions Precedent to All Borrowings. The obligation
of each Bank to make any Loan or to continue or convert any Loan pursuant
to Section 2.02 shall be subject to the further conditions precedent that
(a) in the case of the initial Borrowing, prior to or simultaneously with
such Borrowing, the Borrower shall consummate or have consummated the
Hollywood Marine Merger, (b) on the Borrowing Date or such
Conversion/Continuation Date, as applicable, of such Loan the following
statements shall be true, and the Borrower, by virtue of its delivery of a
Borrowing Request or request for Conversion or continuation shall be deemed
to have certified to the Bank Group as of such Borrowing Date or such
Conversion/Continuation Date, as applicable that (i) the representations
and warranties contained in Article IV are true and correct on and as of
such Borrowing Date or such Conversion/Continuation Date, as applicable,
both before and after giving effect to such Loan, and as though made on and
as of such date, except to the extent that such representations and
warranties specifically refer to any earlier date and (ii) no Default or
Event of Default has occurred and is continuing, or would result from such
Loan or continuation or Conversion and (c) the Administrative Agent shall
have received on or before such Borrowing Date or such
Conversion/Continuation Date, as applicable, such other documents,
certificates and opinions as the Administrative Agent may reasonably
request relating to this Agreement and the other Loan Documents, each in
form and substance reasonably satisfactory to the Administrative Agent.
<PAGE> 57
ARTICLE IV REPRESENTATIONS AND WARRANTIES
In order to induce the Bank Group to enter into this Agreement, the
Borrower hereby represents and warrants to the Bank Group as follows:
Section 4.01. Corporate Existence; Etc. Each of the Borrower and each
of its Material Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified or licensed to transact business as a
foreign corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its operations or the ownership or
leasing of its properties requires such qualification or licensing, except
where the failure to be so qualified or licensed will not have a Material
Adverse Effect on either the Borrower individually or the Borrower and its
Subsidiaries taken as a whole. Schedule 4.01 sets forth a complete list
(including the Borrower's percentage equity interest therein) as of the
date hereof of (a) all Consolidated Subsidiaries (Part A), and (b) all
Excluded Affiliates (Part B), and a complete list as of the date hereof of
(c) all Consolidated Subsidiaries of Hollywood Marine, Inc. and (d) all
other subsidiaries of Hollywood Marine, Inc. and other Persons in which it
owns or controls five percent (5%) or more of the equity interests.
Section 4.02. Corporate Authority; Binding Obligations. Each of the
Borrower and each of its Material Subsidiaries has all requisite power and
authority, corporate or otherwise, to conduct its business and own, operate
and encumber its property. Each of the Borrower and each of its
Subsidiaries has all requisite power and authority, corporate or otherwise,
to execute, deliver and perform all of its obligations under the Loan
Documents executed by, or to be executed by, such Person. The execution,
delivery and performance of each of the Loan Documents to which the
Borrower or any of its Subsidiaries is a party and the consummation of the
transactions contemplated thereby, have been duly authorized by all
necessary corporate and shareholder action. Each of the Loan Documents to
which the Borrower or any of its Subsidiaries is a party has been duly
executed and delivered by such Person, is in full force and effect and
constitutes the legal, valid and binding obligation of such Person,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditor's
rights generally and general principles of equity.
Section 4.03. No Conflict. The execution, delivery and performance by
the Borrower or any of its Subsidiaries of each Loan Document to which such
Person is a party and the consummation of each of the transactions
contemplated thereby do not and shall not, by the lapse of time, the giving
of notice or otherwise: (a) constitute a violation of any Requirement of
Law or a breach of any provision contained in the articles or certificate
of incorporation or bylaws of such Person, or any shareholder agreement
pertaining to such Person, or contained in any material agreement,
instrument or document to which it is now a party or by which it or its
properties is bound, except for such violations or breaches that will not
have a Material Adverse Effect on either the Borrower individually or the
Borrower and its Subsidiaries taken as a whole; or (b) result in or require
the creation or imposition of any Lien whatsoever upon any of the
properties or assets of the Borrower or any of its Subsidiaries.
<PAGE> 58
Section 4.04. No Consent. No authorization, consent, approval,
license, or exemption of or filing or registration with, any Governmental
Authority or any other Person, was, is or will be necessary for the valid
execution, delivery or performance by the Borrower or any of its
Subsidiaries of any of the Loan Documents to which it is a party and the
consummation of each of the transactions contemplated thereby other than
those that the failure to obtain, file or make will not have a Material
Adverse Effect on either the Borrower individually or the Borrower and its
Subsidiaries taken as a whole.
Section 4.05. No Defaults or Violations of Law. No Default or Event
of Default has occurred and is continuing. No default (or event or
circumstance occurred which, but for the passage of time or the giving of
notice, or both, would constitute a default) has occurred and is continuing
with respect to any note, indenture, loan agreement, mortgage, lease, deed
or other agreement to which the Borrower or any of its Subsidiaries is a
party or by which any of them or their properties is bound, except for such
defaults that will not have a Material Adverse Effect on either the
Borrower individually or the Borrower and its Subsidiaries taken as a
whole. Neither the Borrower nor any of its Subsidiaries is in violation of
any applicable Requirement of Law except for such violations that will not
have a Material Adverse Effect on either the Borrower individually or the
Borrower and its Subsidiaries taken as a whole.
Section 4.06. Financial Position. (a) The consolidated balance sheet
of the Borrower and its Subsidiaries as at December 31, 1998, and the
related consolidated statements of income, retained earnings and cash flows
for the fiscal year then ended, audited by KPMG Peat Marwick, independent
public accountants, copies of which have been furnished to the Bank Group,
fairly present the consolidated financial condition of the Borrower and its
Subsidiaries at such date and the consolidated results of their operations
and the consolidated cash flows of the Borrower and its Subsidiaries for
the fiscal period ended on such date, all in accordance with generally
accepted accounting principles applied on a consistent basis.
(b) The unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at June 30, 1999 and the related unaudited consolidated
statements of income, retained earnings and cash flows for the six month
period then ended, copies of which have been furnished to the Bank Group,
fairly present the consolidated financial condition of the Borrower and its
Subsidiaries at such date and the consolidated results of their operations
and the consolidated cash flows of the Borrower and its Subsidiaries for
the six month period ended on such date, all in accordance with generally
accepted accounting principles applied on a consistent basis, subject to
normal year-end adjustments.
(c) Since December 31, 1998, there has been no material adverse
change in the consolidated financial condition or operations of the
Borrower and its Subsidiaries.
(d) Except as fully reflected in financial statements referred
to in paragraphs (a) and (b) of this Section 4.06, as of the date hereof,
there are no liabilities or obligations of the Borrower or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually
or in aggregate, would be material to either the Borrower individually or
the Borrower and its Subsidiaries taken as a whole.
<PAGE> 59
Section 4.07. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries, or the properties of any
such Person, before or by any Governmental Authority or other Person, which
could reasonably be expected to have a Material Adverse Effect on either
the Borrower individually or the Borrower and its Subsidiaries taken as a
whole.
Section 4.08. Use of Proceeds. (a) The Borrower's uses of the
proceeds of the Loans are, and will continue to be, legal and proper
corporate uses (duly authorized by the Borrower's board of directors), and
such uses are permitted by the terms of the Loan Documents, including,
without limitation, Section 5.10, and all Requirements of Law.
(b) Neither the Borrower nor any of its Subsidiaries is engaged
in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U). No part of the
proceeds of any Loan will be used, directly or indirectly, (i) to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or (ii) for the purpose of
purchasing, carrying or trading in any securities, in either case under
such circumstances as to involve any member of the Bank Group in a
violation of Regulation U or the Borrower or any of its Subsidiaries in a
violation of Regulation X. Following the application of the proceeds of
each Loan, not more than 25% of the value of the assets of the Borrower, or
of the Borrower and its Subsidiaries, which are subject to any arrangement
with any member of the Bank Group (herein or otherwise) whereby the right
or ability of the Borrower or its Subsidiaries to sell, pledge or otherwise
dispose of such assets is in any way restricted, will be such margin stock.
Section 4.09. Governmental Regulation. Neither the Borrower nor any
of its Subsidiaries is subject to regulation under the Interstate Commerce
Act, as amended, the Investment Company Act of 1940, as amended, or any
other Requirement of Law such that the ability of any such Person to incur
indebtedness is limited or its ability to consummate the transactions
contemplated by this Agreement, the other Loan Documents or any document
executed in connection therewith is impaired.
Section 4.10. Disclosure. The schedules, documents, exhibits,
reports, certificates and other written statements and information
furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Bank Group do not contain any material misstatement of fact, or omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Neither the Borrower nor any of its Subsidiaries has
intentionally withheld any fact known to it which has or is reasonably
likely to have a Material Adverse Effect on either the Borrower
individually or the Borrower and its Subsidiaries taken as a whole.
Section 4.11. ERISA. The Borrower and its ERISA Affiliates are in
compliance in all material respects with ERISA and all Requirements of Law
related thereto. No Reportable Event has occurred and is continuing with
respect to any Plan. Neither the Borrower nor any of its ERISA Affiliates
has any accumulated funding deficiency (as defined in Section 302(a)(2) of
ERISA) under any Plan.
<PAGE> 60
Section 4.12. Payment of Taxes. The Borrower has filed, and has
caused each of its Material Subsidiaries to file, all federal, state and
local tax returns and other reports that the Borrower and each such
Material Subsidiary are required by law to file and have paid all taxes and
other similar charges that are due and payable pursuant to such returns and
reports, except to the extent any of the same may be contested in good
faith by appropriate proceedings promptly initiated and diligently
conducted, and with respect to which adequate reserves have been set aside
on the books of such Person in accordance with generally accepted
accounting principles.
Section 4.13. Title and Liens. Each of the Borrower and its Material
Subsidiaries has good and marketable title to each of the material
properties and assets of such Person. All properties of the Borrower and
its Material Subsidiaries and such Person's use thereof comply with
applicable zoning and use restrictions, except where the failure to so
comply will not have a Material Adverse Effect upon any such Person.
Section 4.14. Pari Passu Ranking. The obligations of the Borrower to
pay the principal of and interest on the Loans and all other amounts
payable under the Loan Documents will rank at least pari passu as to
payment with all other Debt of the Borrower now existing or hereafter
incurred.
Section 4.15. Environmental Matters. The Borrower and each of its
Subsidiaries possess all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights
necessary under law or otherwise for such Person to conduct its operations
as now being conducted, each of such licenses, permits, authorizations,
registrations, approvals and similar rights is valid and subsisting, in
full force and effect and enforceable by such Person, and such Person is in
compliance with all terms, conditions or other provisions of such permits,
authorizations, registrations, approvals and similar rights except for such
noncompliance that will not have a Material Adverse Effect on either the
Borrower individually or the Borrower and its Subsidiaries taken as a
whole. Neither the Borrower nor any of its Subsidiaries has received any
notices of any violation of, noncompliance with, or remedial obligation
under, Requirements of Environmental Laws, and there are no writs,
injunctions, decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings, investigations or inquiries pending or, to the knowledge of
the Borrower, threatened, relating to the ownership, use, condition,
maintenance, or operation of, or conduct of business related to, any
property owned, leased or operated by the Borrower or any of its
Subsidiaries, or other assets of the Borrower or any of its Subsidiaries,
other than those violations, instances of noncompliance, obligations,
writs, injunctions, decrees, orders, judgments, lawsuits, claims,
proceedings, investigations or inquiries that will not have a Material
Adverse Effect on either the Borrower individually or the Borrower and its
Subsidiaries taken as a whole. There are no material obligations,
undertakings or liabilities arising out of or relating to Environmental
Laws to which the Borrower or any of its Material Subsidiaries has agreed
to, assumed or retained, or by which the Borrower or any of its Material
Subsidiaries is adversely affected, by contract or otherwise. Neither the
Borrower nor any of its Material Subsidiaries has received a written notice
or claim to the effect that such Person is or may be liable to any Person
as the result of a Release or threatened Release of a Hazardous Material.
<PAGE> 61
Section 4.16. Year 2000. The Borrower has (a) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business
and operations (including those affected by customers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer applications and devices containing embedded computer chips
used by Borrower or any of its Subsidiaries (or their respective customers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (b) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (c) to date, implemented that plan in
accordance with that timetable. The Borrower believes that all computer
applications and devices containing imbedded computer chips (including
those of its and its Subsidiaries' customers and vendors) that are material
to its or any of its Subsidiaries' business and operations are reasonably
expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be "Year
2000 compliant"), except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 4.17. Citizenship. The Borrower and its Consolidated
Subsidiaries that are engaged in the operation of vessels in the coastwise
trade of the United States are in compliance with the U.S. citizenship
requirements applicable to Persons entitled to operate vessels in the
coastwise trade of the United States to the extent required by the Jones
Act, 46 U.S.C. Sec. 802, and other applicable Requirements of Law.
ARTICLE V AFFIRMATIVE COVENANTS
So long as any principal amount of any Loan, any amount of interest
accrued under any Loan Document, or any commitment, facility or other fee,
expense, compensation or any other amount payable to any member of the Bank
Group under the Loan Documents shall remain unpaid or outstanding or any
Bank shall have any Commitment hereunder:
Section 5.01. Reporting Requirements. The Borrower shall deliver or
cause to be delivered to the Administrative Agent (with sufficient copies
for the Administrative Agent to distribute the same to the other members of
the Bank Group):
(a) As soon as available and in any event within forty five (45)
days after the end of each calendar quarter (other than the fourth
quarter):
(i) copies of the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the end
of such period, and consolidated and consolidating statements of
income and retained earnings and a statement of cash flows of the
Borrower and its Subsidiaries for that fiscal period and for the
portion of the fiscal year ending with such period, in each case
setting forth in comparative form (on a consolidated, but not a
consolidating basis) the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail; and
<PAGE> 62
(ii) a certificate of a Responsible Officer of the
Borrower (A) stating that such financial statements fairly
present the consolidated financial position and results of
operations of the Borrower and its Subsidiaries in accordance
with generally accepted accounting principles consistently
applied, subject to normal year-end adjustments, (B) stating that
no Default or Event of Default has occurred and is continuing or,
if any Default or Event of Default has occurred and is
continuing, the action the Borrower is taking or proposes to take
with respect thereto, (C) setting forth calculations
demonstrating compliance by the Borrower with Section 6.01 and
Section 6.08, accompanied by a summary (on an entity- by-entity
basis) of Investments in Excluded Affiliates and Funded Debt of
the Borrower and its Consolidated Subsidiaries, as well as any
Funded Debt or Fixed Charges resulting from a Guaranty of Debt of
an Excluded Affiliate, and (D) identifying any changes in the
Consolidated Subsidiaries and Excluded Affiliates since the date
of the most recent certificate delivered pursuant to Section
5.01(a)(ii) or Section 5.01(b)(ii) (or in the case of the initial
certificate, any changes from those specified in Schedule 4.01).
(b) As soon as available and in any event within ninety (90)
days after the end of each calendar year:
(i) copies of the consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as of the
close of such calendar year and consolidated and consolidating
statements of income and retained earnings and a statement of
cash flows of the Borrower and its Subsidiaries for such calendar
year, in each case setting forth in comparative form (on a
consolidated basis) the figures for the preceding calendar year,
all in reasonable detail and accompanied by an opinion thereon
(which shall not be qualified or limited because of restricted or
limited examination by the independent accountants of any
material portion of the Borrower's or any Subsidiary's records)
of independent accountants of recognized national standing
selected by the Borrower and reasonably satisfactory to the
Majority Banks, to the effect that such consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles consistently applied (except for
changes in which such accountants concur) and that the
examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted
auditing standards; and
(ii) a certificate of a Responsible Officer of the
Borrower (A) stating that no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default
has occurred and is continuing, the action the Borrower is taking
or proposes to take with respect thereto, (B) setting, forth
calculations demonstrating compliance by the Borrower with
Section 6.01 and Section 6.08, accompanied by a summary (on an
entity-by-entity basis) of Investments in Excluded Affiliates and
Funded Debt of the Borrower and its Consolidated Subsidiaries, as
well as any Funded Debt or Fixed Charges resulting from a
Guaranty of Debt of an Excluded Affiliate, and (C) identifying
<PAGE> 63
any changes in the Consolidated Subsidiaries and Excluded
Affiliates since the date of the most recent certificate
delivered pursuant to Section 5.01(a)(ii) or Section 5.01(b)(ii).
(c) Promptly after the sending or filing thereof, copies of all
proxy statements and reports which the Borrower or any of its Subsidiaries
sends to any holders of its respective securities, and copies of all
regular, periodic and special reports and all registration statements which
the Borrower or any of its Subsidiaries files with the Securities and
Exchange Commission or any national securities exchange.
(d) Promptly after the receipt thereof, copies of any reports or
notices that the Borrower may receive from the PBGC or the U. S.
Department of Labor indicating that a Reportable Event has occurred or an
accumulated funding deficiency (as defined in Section 302(a)(2) of ERISA)
exists under any Plan or that any such Person or its ERISA Affiliates has
failed to comply in all material respects with ERISA and all Requirements
of Law related thereto.
(e) Promptly after a Responsible Officer of the Borrower becomes
aware of the occurrence of a Default or Event of Default, a certificate of
a Responsible Officer of the Borrower setting forth details of such Default
or Event of Default and the action which has been taken or is to be taken
with respect thereto.
(f) As soon as possible and in any event within ten (10) days
after a Responsible Officer of the Borrower becomes aware thereof, written
notice from a Responsible Officer of the Borrower of (i) the institution of
or threat of, any action, suit, proceeding, governmental investigation or
arbitration by any Governmental Authority or other Person against or
affecting the Borrower or any of its Subsidiaries that could have a
Material Adverse Effect on the Borrower or any of its Material Subsidiaries
and that has not previously disclosed in writing to the Bank Group pursuant
to this Section 5.01(f) or (ii) any material development in any action,
suit, proceeding, governmental investigation or arbitration already
disclosed to the Bank Group pursuant to this Section 5.01(f).
(g) Promptly upon a Responsible Officer of the Borrower
obtaining knowledge thereof, notice of (i) any violation of, noncompliance
with, or remedial obligations under, Requirements of Environmental Laws
that could have a Material Adverse Effect on the Borrower or any of its
Material Subsidiaries, (ii) any Release or threatened Release affecting any
property owned, leased or operated by the Borrower or any of its
Subsidiaries that could have a Material Adverse Effect on the Borrower or
any of its Material Subsidiaries, (iii) the amendment or revocation of any
permit, authorization, registration, approval or similar right that could
have a Material Adverse Effect on the Borrower or any of its Material
Subsidiaries or (iv) new or proposed changes to Requirements of
Environmental Laws that could have a Material Adverse Effect on the
Borrower or any of its Material Subsidiaries.
(h) Such other information as any member of the Bank Group may
from time to time reasonably request respecting the business, properties,
operations or condition, financial or otherwise, of the Borrower or any of
its Subsidiaries.
<PAGE> 64
Section 5.02. Taxes; Claims. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon such Person or
upon its income or profits, or upon any properties belonging to such
Person, prior to the date on which penalties attach thereto, and all lawful
claims which, if unpaid, might become a Lien upon any properties of the
Borrower or any of its Material Subsidiaries, other than any such tax,
assessment, charge, levy or claim which is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted, and
with respect to which adequate reserves are set aside on the books of such
Person in accordance with generally accepted accounting principles.
Section 5.03. Compliance with Laws. The Borrower will comply, and
will cause each of its Subsidiaries to comply, with all applicable
Requirements of Law imposed by, any Governmental Authority, noncompliance
with which might have a Material Adverse Effect on the Borrower or any of
its Material Subsidiaries. Without limitation of the foregoing, the
Borrower shall, and shall cause each of its Subsidiaries to, comply with
all Requirements of Environmental Laws, operate its properties and conduct
its business in accordance with good environmental practices, and handle,
treat, store and disposed of Hazardous Materials in accordance with such
practices, except where the failure to do so will not have a Material
Adverse Effect on the Borrower or any of its Material Subsidiaries.
Section 5.04. Insurance. The Borrower will maintain, and will cause
each of its Subsidiaries to maintain, with financially sound, responsible
and reputable insurance companies or associations, insurance, or self-
insure against such risks, and in such amounts (and with co-insurance and
deductibles), as are usually insured against by Persons of established
reputation engaged in the same or similar businesses and similarly
situated.
Section 5.05. Corporate Existence; Etc. The Borrower will preserve
and maintain, and (except as otherwise permitted by Section 6.05) will
cause each of its Material Subsidiaries to preserve and maintain, its
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each of its
Material Subsidiaries to qualify and remain qualified, as a foreign
corporation in each jurisdiction in which such qualification is material to
the business and operations of such Person or the ownership or leasing of
the properties of such Person.
Section 5.06. Inspections; Etc. From time to time during regular
business hours upon reasonable prior notice, the Borrower will permit, and
will cause each of its Subsidiaries to permit, any agents or
representatives of any member of the Bank Group to examine and make copies
of and abstracts from the records and books of account of, and visit the
properties of, the Borrower and its Subsidiaries and to discuss the
affairs, finances and accounts of any such Person with any of their
respective independent public accountants, officers or directors, all at
the expense of the Borrower.
Section 5.07. Maintenance of Properties. The Borrower will maintain
and preserve, and will cause each of its Material Subsidiaries to maintain
and preserve, all of its material properties necessary for the proper
conduct of its business in good working order and condition, ordinary wear
and tear excepted.
<PAGE> 65
Section 5.08. Accounting Systems; Etc. The Borrower will keep, and
will cause each of its Subsidiaries to keep, adequate records and books of
account in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied (subject to year end
adjustments), reflecting all financial transactions of such Person. The
Borrower shall maintain or cause to be maintained a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with generally
accepted accounting principles, and each of the financial statements
described herein shall be prepared from such system and records.
Section 5.09. Contractual Obligations. The Borrower will comply, and
will cause each of its Subsidiaries to comply, with their respective
contractual obligations, except where failure to do so will not have a
Material Adverse Effect on the Borrower or any of its Material
Subsidiaries.
Section 5.10. Use of Loan Proceeds. The Borrower will use the
proceeds of all Loans hereunder for the following purposes: for working
capital, capital expenditures, to provide liquidity for commercial paper,
to finance the acquisition of Hollywood Marine, Inc., and general corporate
purposes of the Borrower and its Consolidated Subsidiaries ; provided that
such uses are, at the time made, otherwise consistent with the terms of
this Agreement and all Requirements of Law and no Default or Event of
Default would result therefrom.
Section 5.11. Further Assurances in General. The Borrower at its
expense shall, and shall cause each of its Subsidiaries to, promptly
execute and deliver all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants and
agreements of the Borrower or any of its Subsidiaries in the Loan
Documents, including, without limitation, the accomplishment of any
condition precedent that may have been waived by the Banks prior to the
initial Borrowing or any subsequent Borrowings.
Section 5.12. Year 2000. The Borrower has implemented and will cause
each of its Subsidiaries to implement a plan and timeline for addressing
the Year 2000 Problem, and will continue to implement that plan in
accordance with that timetable. The Borrower will take and will cause each
of its Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the plan and to assure that Year 2000 Problems will
not have a Material Adverse Effect. At the request of the Administrative
Agent or any Bank, the Borrower will provide a description of the plan,
together with any update or progress reports thereto.
ARTICLE VI NEGATIVE COVENANTS
So long as any principal amount of any Loan, any amount of interest
accrued under any Loan Document, or any commitment, facility or other fee,
expense, compensation or any other amount payable to any member of the Bank
Group under the Loan Documents shall remain unpaid or outstanding or any
Bank shall have any Commitment hereunder:
<PAGE> 66
Section 6.01. Financial Covenants. The Borrower will not:
(a) Fixed Charge Coverage Ratio. Permit the ratio of (i) Net
Cash Flow to (ii) Fixed Charges, measured as of the last day of any
calendar quarter for the twelve month period then ended, to be less than
1.25 to 1.0.
(b) Debt Coverage Ratio. Permit the ratio of (i) Funded Debt as
of the last day of any calendar quarter to (ii) Modified Net Cash Flow for
the twelve month period then ended, to equal or exceed 3.5 to 1.0.
(c) Minimum Net Worth. Permit Net Worth, measured as of the
last day of any calendar quarter, to be less than the sum of (i)
$185,000,000, plus (ii) a cumulative amount (calculated as of the end of
each fiscal year during the term of this Agreement) equal (x) to fifty
percent (50%), if positive, zero percent (0%), if negative, of Net Income
for the period July 1, 1999 through December 31, 1999 plus (y) fifty
percent (50%), if positive, zero percent (0%), if negative, of Net Income
for each fiscal year ending thereafter plus (iii) 100% of net cash proceeds
from the issuance and sale (other than to a Subsidiary of the Borrower)
after the Effective Date of the Borrower's capital stock.
Section 6.02. Restrictions on Debt. (a) The Borrower will not, and
will not permit any of its Consolidated Subsidiaries to, create, incur,
assume or suffer to exist, any Debt other than:
(i) Debt of the Borrower under the Loan Documents, and
the loans outstanding under the Existing Credit Agreement;
(ii) Debt in respect of reimbursement obligations under
letters of credit or similar instruments not exceeding
$5,000,000;
(iii) unsecured Debt owing by the Borrower to any
Consolidated Subsidiary;
(iv) unsecured Debt owing by any Consolidated
Subsidiary to the Borrower or any other Consolidated Subsidiary
so long as such Debt ranks pari passu with all other Debt of such
Consolidated Subsidiary (except as contemplated by Section
6.02(d));
(v) Debt (other than Derivative Obligations) of
Consolidated Subsidiaries, so long as (A) no Default or Event of
Default exists on the date such Debt is incurred or would result
from the incurrence of such Debt, and (B) the aggregate amount of
such Debt does not exceed twenty percent (20%) of Net Worth;
(vi) Debt (other than Derivative Obligations) of the
Borrower, so long as (A) such Debt is not Guaranteed by any
Subsidiary of the Borrower and (B) no Default or Event of Default
exists on the date such Debt is incurred or would result from the
incurrence of such Debt; and
<PAGE> 67
(vii) Derivative Obligations of the Borrower and
its Consolidated Subsidiaries, so long as (A) no Default or Event
of Default exists on the date such Derivative Obligations are
incurred or would result from the incurrence thereof and (B) the
aggregate amount of such Derivative Obligations do not exceed ten
percent (10%) of Net Worth.
(b) The Borrower will not, and will not permit any of its
Consolidated Subsidiaries to, create, incur, assume or suffer to exist, any
Guaranties or other contingent liabilities other than (i) Guaranties by
Consolidated Subsidiaries that constitute Debt permitted by Section
6.02(a)(v), (ii) Guaranties by the Borrower that constitute Debt permitted
by Section 6.02(a)(vi), (iii) other contingent liabilities (including
undrawn letters of credit) in an amount not exceeding $5,000,000 at any
time, and (iv) contingent liabilities arising under guaranties by the
Borrower or its Subsidiaries of the obligations of the Borrower's
Subsidiaries under Environmental Laws, including the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, and the
Oil Pollution Act of 1990, as amended.
(c) The Borrower will not permit any Excluded Affiliate to
create, incur, assume or suffer to exist any Debt unless the agreements
evidencing or providing for such Debt contain a provision to the effect
that the holders of such Debt shall have no recourse against the Borrower
or any of its Consolidated Subsidiaries, or any of their respective assets,
for the payment of such Debt; provided, however, that the foregoing shall
not apply to any such Debt of an Excluded Affiliate that is covered by a
Guaranty from the Borrower or a Consolidated Subsidiary permitted by
Section 6.02(b).
(d) The Borrower shall not permit Kirby Inland Marine to create,
incur, assume or suffer to exist any Debt or other obligation that would
constitute "Senior Obligations" (as such term is defined in that certain
Revolving Credit Loan Agreement dated as of July 31, 1990, as amended,
between Kirby Inland Marine, as borrower, and the Borrower, as lender)
other than Debt arising under the Dixie Note Purchase Agreement as in
effect on the Effective Date.
Section 6.03. Restriction on Liens. The Borrower will not, and will
not permit any of its Consolidated Subsidiaries to, create, incur, assume
or suffer to be created, assumed or incurred or to exist, any Lien upon any
of their property or assets, whether now owned or hereafter acquired other
than:
(a) Liens arising after the date hereof pursuant to Section 6.9
(but not Section 7.3) of the Dixie Note Purchase Agreement as in effect on
the Effective Date;
(b) Liens against assets of the Borrower or a Consolidated
Subsidiary securing Debt of such Person, so long as (i) the aggregate
amount of all such secured Debt does not exceed $5,000,000, and (ii) such
secured Debt is otherwise permitted by Section 6.02(a)(vi), in the case of
the Borrower, or Section 6.02(a)(v), in the case of a Consolidated
Subsidiary;
<PAGE> 68
(c) Liens imputed to Capital Leases under which a Consolidated
Subsidiary is the lessee, so long as the Debt of such Consolidated
Subsidiary in respect of such Capital Lease is permitted by Section
6.02(a)(v);
(d) Liens on property of any Consolidated Subsidiary that attach
concurrently with such Consolidated Subsidiary's purchase thereof, and
securing only Debt of such Consolidated Subsidiary permitted by Section
6.02(a)(v) and incurred to finance all or part of the purchase price of
such property, and any extensions and renewals of such Liens so long as the
Debt secured thereby is not greater than the Debt secured immediately prior
to such extension and renewal and such Debt is permitted by Section
6.02(a)(v) at the time of such extension and renewal;
(e) Liens for taxes, assessments or governmental charges or
levies if the same shall at the time not be delinquent or thereafter may be
paid without penalty, or the validity of which are being contested in good
faith by appropriate proceedings promptly initiated and diligently
conducted and as to which adequate reserves shall have been set aside on
the books of the Borrower in accordance with generally accepted accounting
principles;
(f) carriers', warehousemen's and mechanics' liens and other
similar Liens which arise in the ordinary course of business, do not
materially impair the use or value of its properties or assets or the
conduct of its business, and secure obligations that are not yet due and
payable or are being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and as to which adequate
reserves shall have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles or as to which
adequate bonds shall have been obtained;
(g) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation or to secure public or statutory
obligations of the Borrower;
(h) Liens created in favor of a Governmental Authority to secure
partial, progress, advance or other contractual payments pursuant to any
agreement or statute;
(i) attachment, judgment and other similar Liens arising in
connection with court proceedings, provided the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings in such manner as not to have the property subject to such
Liens forfeitable;
(j) easements, rights-of-way, reservations, exceptions, minor
encroachments, restrictions and similar charges created or incurred in the
ordinary course of business which in the aggregate do not materially
interfere with the business operations of the Borrower and its Subsidiaries
taken as a whole, and which were not incurred in connection with the
borrowing of money; and
<PAGE> 69
(k) Liens against the capital stock, promissory notes and other
equity or debt interests of any Consolidated Subsidiary, subject to
compliance with Section 6.12.
Section 6.04. Restrictions on Negative Pledge. The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any agreement
prohibiting or having the effect of prohibiting the Borrower and its
Subsidiaries from granting a Lien against or otherwise disposing of the
capital stock, promissory notes or other equity or debt interests of any
Consolidated Subsidiary, other than (i) this Agreement, and the Existing
Credit Agreement, and (ii) in the case of Kirby Inland Marine, the
provisions of Section 7.3 of the Dixie Note Purchase Agreement as in effect
on the Effective Date and as thereafter amended to lessen or eliminate the
restrictions contained therein.
Section 6.05. Consolidated Subsidiaries Dispositions. The Borrower
will not, and will not permit any of its Subsidiaries to, sell, transfer or
otherwise dispose of (i) any capital stock or other equity interests of any
Consolidated Subsidiary or (ii) all or substantially all of the assets of
the Borrower or any Consolidated Subsidiary (whether in a single
transaction or series of transactions), other than (A) any such disposition
made to the Borrower or a wholly-owned Consolidated Subsidiary, (B) any
disposition of capital stock or other equity interests in Kirby Inland
Marine so long as after giving effect to such disposition the Borrower owns
(either directly or indirectly through a wholly-owned Consolidated
Subsidiary) at least 90% of the capital stock or other equity interests of
Kirby Inland Marine, and (C) the disposition of the capital stock of
Mariner Reinsurance Company, a company organized under the laws of Bermuda
and a Consolidated Subsidiary, arising out of the liquidation and
dissolution of such entity.
Section 6.06. Restrictions on Consolidated Subsidiary Distributions.
The Borrower will not, and will not permit any of its Subsidiaries to,
enter into any agreement restricting the ability of any Consolidated
Subsidiary to (a) pay dividends or make other distributions on the capital
stock or other equity interests of such Consolidated Subsidiary or (b) make
loans or advances to the Borrower or any Subsidiary of the Borrower, other
than (i) this Agreement, and (ii) in the case of Kirby Inland Marine, the
provisions of Section 7.4 of the Dixie Note Purchase Agreement as in effect
on the Effective Date and as thereafter amended to lessen or eliminate the
restrictions contained therein.
Section 6.07. Mergers and Acquisitions. The Borrower will not, and
will not permit any of its Consolidated Subsidiaries to, acquire (whether
in one transaction or a series of transactions) all or substantially all of
the assets of any Person or the capital stock or securities of any Person,
or consolidate with or merge into any Person or permit any Person to
consolidate or merge into it, unless: (a) in the case of an acquisition,
such acquisition is not a Hostile Acquisition; (b) any business acquired in
such transaction is similar or related to the businesses engaged in by the
Borrower and its Consolidated Subsidiaries on the date hereof, (c) in the
case of a merger (i) if the Borrower is a party to such merger, the
Borrower is the surviving entity and the management of the Borrower shall
be substantially unchanged and (ii) if a Consolidated Subsidiary is a party
<PAGE> 70
to such merger, either the Borrower or a Consolidated Subsidiary is the
surviving entity; (d) immediately after giving effect and pro forma effect
thereto, no Default or Event of Default shall exist; and (e) if the
Borrower incurs Funded Debt in excess of $25,000,000 to finance, or
otherwise in connection with, any acquisition or merger otherwise permitted
by this Agreement, then (i) the ratio of (A) the total consideration given
by the Borrower and its Subsidiaries in connection therewith to (B) the
projected net cash flow from the assets acquired pursuant to such
transaction for the twelve-month period immediately following the closing
of such transaction, must not be greater than 8.00 to 1.00 (for purposes of
this clause (a) "projected net cash flow" shall mean the Borrower's
estimate of the operating earnings from the assets acquired pursuant to
such transaction for the twelve (12) month period immediately following the
closing of such transaction, before tax, plus any depreciation and
amortization included in such estimated operating earnings, all determined
in accordance with generally accepted accounting principles and based upon
such assumptions as are reasonably acceptable to the Majority Banks) and
(ii) the Administrative Agent shall have received (A) a certificate of a
Responsible Officer of the Borrower showing satisfaction of the
condition set forth in Section 6.07(e)(i), and (B) such other documents,
opinions and information that the Administrative Agent or the Majority
Banks may reasonably request in order to substantiate the same.
Section 6.08. Restricted Investments. (a) The Borrower will not, and
will not permit any Consolidated Subsidiary to, make, or enter into any
commitment to make, any Restricted Investment if a Default or Event of
Default exists either before or after giving effect thereto.
(b) The Borrower will not, and will not permit any Consolidated
Subsidiary to, make, or enter into any commitment to make, or permit to
exist any Restricted Investment other than Restricted Investments that do
not in the aggregate exceed twenty percent (20%) of Net Worth.
(c) The Borrower will not permit the sum (without duplication)
of (i) all Restricted Investments, made by the Borrower and its
Consolidated Subsidiaries, plus (ii) all commitments by the Borrower and
its Consolidated Subsidiaries to make Restricted Investments, plus (iii)
all Debt (other than Derivative Obligations) of Consolidated Subsidiaries,
to at any time exceed thirty-five percent (35%) of Net Worth.
Section 6.09. Restricted Payments. The Borrower will not, and will
not permit any of its Subsidiaries to, at any time, declare or make, any
Restricted Payment unless immediately after giving effect to such action no
Default or Event of Default would exist.
Section 6.10. Lines of Business. The Borrower will not, and will not
permit any of its Consolidated Subsidiaries to, directly or indirectly
engage to a material extent in any business other than those in which it is
presently engaged or that are directly related thereto, or discontinue any
of its existing lines of business or substantially alter its method of
doing business.
<PAGE> 71
Section 6.11. Transactions with Affiliates. Neither the Borrower, nor
any of its Consolidated Subsidiaries, will enter into any transaction with
an Affiliate other than (a) transactions entered into in the ordinary
course of business and upon terms no less favorable than those that the
Borrower or its Consolidated Subsidiary, as applicable, could obtain in an
arms length transaction with a Person that is not an Affiliate and (b)
transactions between the Borrower and any of its Consolidated Subsidiaries,
or between such Consolidated Subsidiaries, that do not and will not, either
directly or indirectly, cause a Default or an Event of Default.
Section 6.12. Pari Passu Liens. In the event the Borrower or any
Consolidated Subsidiary creates, incurs, assumes, or suffers to be created,
assumed, incurred or permits to exist, a Lien on capital stock, promissory
notes or other equity or debt interests of any Consolidated Subsidiary, the
Borrower or such Consolidated Subsidiary, as applicable, shall
contemporaneously thereon grant a pari passu lien on such assets, on terms
and conditions satisfactory to the Administrative Agent and the Majority
Banks, so that all Indebtedness and obligations of the Borrower hereunder
and under the other Loan Documents will be secured equally and ratably with
any and all other Indebtedness secured thereby.
ARTICLE VII DEFAULT
Section 7.01. Events of Default. If any of the following events (each
an "Event of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay when due any installment of
principal of the Loans; or
(b) the Borrower shall fail to pay any interest on any Loan or
any arrangement fee, commitment fee, utilization fee, administration fee,
commission, expense, compensation, reimbursement or other amount when due,
or any Person (other than a member of the Bank Group) shall fail to pay any
amount payable by such Person hereunder or under any other Loan Document or
other agreement or security document contemplated by or delivered pursuant
to or in connection with this Agreement when due, and, in either event,
such failure shall continue for five (5) Business Days; or
(c) the Borrower shall fail to perform any term, covenant or
agreement contained in Article VI or Section 5.01(e) of this Agreement; or
(d) the Borrower shall fail to perform any term, covenant or
agreement contained in this Agreement (other than those referenced in
subsections (a), (b) and (c) of this Section 7.01) and such failure shall
not have been remedied within ten (10) days after the earlier of (i) notice
thereof from the Administrative Agent to the Borrower or (ii) discovery
thereof by the Borrower; or
(e) any Person (other than a member of the Bank Group) shall
fail to perform any term, covenant or agreement contained in any Loan
Document (other than those referenced in subsections (a), (b), (c) and (d)
of this Section 7.01) to which it is a party and such failure shall not
have been remedied within thirty (30) days after the earlier of (i) notice
thereof from the Administrative Agent to the Borrower or (ii) discovery
thereof by the Borrower; or
<PAGE> 72
(f) any representation or warranty made by any Person (other
than a member of the Bank Group), or any such Person's officers, in any
Loan Document to which it is a party or in any certificate, agreement,
instrument or statement contemplated by or delivered pursuant to, or in
connection with, any Loan Document shall prove to have been incorrect in
any material respect when made; or
(g) the Borrower or any of its Subsidiaries shall (i) default in
the payment of any Debt (other than the amounts referred to in subsections
(a) and (b) of this Section 7.01) owing by such Person that constitutes
Material Debt as of the date of such default, or any interest or premium
thereon, when due (or, if permitted by the terms of the relevant document,
within any applicable grace period), whether such Debt shall become due by
scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise; or (ii) fail to perform any term, covenant or condition on its
part to be performed under any agreement or instrument evidencing, securing
or relating to any such Debt, when required to be performed, and such
failure shall continue after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such failure is to
accelerate, or to permit the holder or holders of such Debt to accelerate,
the maturity of such Debt; or
(h) any Loan Document shall (other than with the consent of the
Majority Banks), at any time after its execution and delivery and for any
reason, cease to be in full force and effect (except for such provisions
that the Majority Banks determine are not material either individually or
in the aggregate), or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by any Person party
to the Loan Documents or any such Person shall deny that it has any or
further liability or obligation under any Loan Document; or
(i) any Reportable Event that might constitute grounds for the
termination of any Plan, or for the appointment by an appropriate United
States district court of a trustee to administer any Plan, shall have
occurred and be continuing for at least thirty (30) days, or any Plan shall
be terminated, or a trustee shall be appointed by an appropriate United
States district court to administer any Plan, or the PBGC shall institute
proceedings to terminate any Plan or to appoint a trustee to administer any
Plan, and, in any such event, the then-current value of such Plan's
benefits guaranteed under Title IV of ERISA at the time shall exceed by
more than $5,000,000 the then-current value of such Plan's assets allocable
to such benefits at such time; or
(j) the Borrower or any of its Subsidiaries shall be adjudicated
insolvent, or shall make a general assignment for the benefit of creditors,
or any proceeding shall be instituted by any such Person seeking to
adjudicate it insolvent, seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property, or the Borrower or any of its
Subsidiaries shall take any action in furtherance of any of the actions set
forth above in this Section 7.01 (j); or
<PAGE> 73
(k) any proceeding of the type referred to in Section 7.01(j) is
filed, or any such proceeding is commenced against the Borrower or any of
its Subsidiaries or any such Person by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order for relief is
entered in an involuntary case under the bankruptcy law of the United
States, or an order, judgment or decree is entered appointing a trustee,
receiver, custodian, liquidator or similar official or adjudicating any
such Person insolvent, or approving the petition in any such proceedings,
and such order, judgment or decree remains in effect for sixty (60) days;
or
(l) a final judgment or order for the payment of money in excess
of $5,000,000 (net of acknowledged, uncontested insurance coverage from a
financially sound, responsible and reputable insurance company or
association) shall be rendered against the Borrower or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) a stay of
enforcement of such judgment or order by reason of a pending appeal or
otherwise, shall not be in effect for any period of thirty (30) consecutive
days; or
(m) a Change of Control occurs with respect to the Borrower;
then, (i) upon the occurrence of any Event of Default described in Section
7.01(j) or Section 7.01(k), (A) the Commitments shall automatically
terminate and (B) the entire unpaid principal amount of all Loans, all
interest accrued and unpaid thereon, and all other amounts payable by the
Borrower or any other Person under this Agreement, the Notes and the other
Loan Documents shall automatically become immediately due and payable,
without presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of
which are hereby expressly waived by the Borrower and each other Person,
and (ii) upon the occurrence of any Event of Default, the Administrative
Agent may, and upon the direction of the Majority Banks shall, by notice to
the Borrower (A) declare the Commitments to be terminated, whereupon the
same shall forthwith terminate and (B) declare the entire unpaid principal
amount of all Loans, all interest accrued and unpaid thereon, and all other
amounts payable by the Borrower or any other Person under this Agreement,
the Notes and the other Loan Documents, to be forthwith due and payable,
whereupon all such amounts shall become and be forthwith due and payable,
without presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration or further notice of any kind, all of
which are hereby expressly waived by the Borrower and each other Person.
<PAGE> 74
Section 7.02. Setoff in Event of Default. Upon the occurrence and
during the continuance of any Event of Default, each member of the Bank
Group is hereby authorized, at any time and from time to time, without
notice to the Borrower (any such notice being expressly waived by the
Borrower) and to the fullest extent permitted by applicable law, to setoff
and apply any and all deposits at any time held and other indebtedness at
any time owing by such member of the Bank Group (or any branch, subsidiary
or affiliate of such member of the Bank Group) to or for the credit or the
account of the Borrower against any and all of the obligations of the
Borrower or any other Person, now or hereafter existing under this
Agreement, the Notes or the other Loan Documents, irrespective of whether
or not such member of the Bank Group shall have made any demand for
satisfaction of such obligations and although such obligations may be
unmatured. Any member of the Bank Group exercising such right agrees to
notify the Borrower promptly after any such setoff and application made by
such Person; provided, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of the Bank
Group under this Section 7.02 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Bank
Group may have hereunder or under any applicable law.
Section 7.03. No Waiver; Remedies. No failure on the part of any
member of the Bank Group to exercise, or any delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided
in any of the other Loan Documents or by applicable law.
ARTICLE VIII THE ADMINISTRATIVE AGENT
Section 8.01. Authorization and Action. Each Bank hereby appoints and
authorizes the Administrative Agent to take such action in such capacity on
such Bank's behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Administrative Agent by the
terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes or of amounts owing under the other Loan Documents), the
Administrative Agent shall not be required to exercise any discretion or
take any action, but such Person shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Banks, and such instructions
shall be binding upon all Banks and any other holders of Notes; provided,
however, that the Administrative Agent shall not be required to take any
action which exposes such Person to personal liability or which is contrary
to the Loan Documents or applicable law. The Administrative Agent is
hereby expressly authorized on behalf of the other members of the Bank
Group, (a) to receive on behalf of each of the other members of the Bank
Group any payment of principal of or interest on the Loans outstanding
hereunder and all other amounts accrued hereunder paid to such Persons, and
promptly to distribute to each other member of the Bank Group its proper
share of all payments so received; (b) to give notice within a reasonable
<PAGE> 75
time on behalf of each other member of the Bank Group to the Borrower of
any Default or Event of Default of which the Administrative Agent has
actual knowledge as provided in Section 8.08; (c) to distribute to the
other members of the Bank Group copies of all notices, agreements and other
material as provided for in this Agreement as received by such Person; and
(d) to distribute to the Borrower any and all requests, demands and
approvals received by such Person from any other member of the Bank Group.
Nothing herein contained shall be construed to constitute the
Administrative Agent as a trustee for any holder of the Notes or of a
participation therein, nor to impose on any such Person any duties or
obligations other than those expressly provided for in the Loan Documents.
Section 8.02. Reliance, Etc. The Administrative Agent and its
directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement, except for such acts or omissions of such Person constituting
gross negligence or willful misconduct on the part of such Person (IT BEING
THE EXPRESS INTENTION OF THE PARTIES THAT THE ADMINISTRATIVE AGENT AND ITS
DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS SHALL HAVE NO LIABILITY FOR
ACTIONS AND OMISSIONS HEREUNDER RESULTING THAT CONSTITUTE ORDINARY
NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY) OR RESULT IN STRICT LIABILITY.
Without limitation of the generality of the foregoing, the Administrative
Agent: (a) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Bank which is the payee of such Note, as assignor, and
an Eligible Assignee, as assignee, as provided in Section 9.02, and the
Administrative Agent notifies such Person thereof, (b) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Bank and shall not be responsible to any
Bank for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions
of this Agreement or the other Loan Documents on the part of the Borrower
or any other Person or to inspect the property (including the books and
records) of the Borrower or any other Person; (e) shall not be responsible
to any Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Loan Document, any collateral
provided for therein, or any other instrument or document furnished
pursuant thereto; and (f) shall incur no liability under or in respect of
this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper party
or parties. The Administrative Agent, its directors, officers, employees
or agents shall not have any responsibility to the Borrower on account of
the failure or delay in performance or breach by any Bank of any of its
obligations hereunder or to any Bank on account of the failure of or delay
in performance or breach by any other Bank or the Borrower of any of their
respective obligations hereunder or in connection herewith.
<PAGE> 76
Section 8.03. Chase and Affiliates. Without limiting the right of
any other Bank to engage in any business transactions with the Borrower or
any of its Affiliates, with respect to its Commitment, the Loans made by
it, the Note issued to it, and its interest in the Loan Documents, Chase
shall have the same rights and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Administrative
Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include Chase in its individual capacity. Chase, or any of its
Affiliates, may be engaged in, or may hereafter engage in, one or more
loan, letter of credit, leasing or other financing activities not the
subject of the Loan Documents (such financing activities of Chase being,
collectively, the "Other Financings") with the Borrower or any of its
Affiliates, or may act as trustee on behalf of, or depositary for, or
otherwise engage in other business transactions with the Borrower or any of
its Affiliates (all Other Financings and other such business transactions
of Chase being, collectively, the "Other Activities") with no
responsibility to account therefor to the Banks. Without limiting the
rights and remedies of the Banks specifically set forth in the Loan
Documents, no other Bank shall have any interest in (a) any Other
Activities, (b) any present or future guarantee by or for the account of
the Borrower not contemplated or included in the Loan Documents, (c) any
present or future offset exercised by the Administrative Agent in respect
of any such Other Activities, (d) any present or future property taken as
security for any such Other Activities or (e) any property now or hereafter
in the possession or control of the Administrative Agent which may be or
become security for the obligations of the Borrower under the Loan
Documents by reason of the general description of indebtedness secured, or
of property, contained in any other agreements, documents or instruments
related to such Other Activities; provided, however, that if any payment in
respect of such guarantees or such property or the proceeds thereof shall
be applied to reduction of the obligations evidenced hereunder and by the
Notes, then each Bank shall be entitled to share in such application
according to its pro rata portion of such obligations.
Section 8.04. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon any other member of the Bank
Group and based on the financial statements referred to in Section 4.06 and
such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon any
other member of the Bank Group and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement.
<PAGE> 77
Section 8.05. Indemnification. The Banks agree to indemnify each of
the Administrative Agent, the Syndication Agent and the Documentation Agent
(for purposes of this paragraph, each, an "Agent") and their respective
officers, employees, agents, Affiliates, directors and shareholders
(collectively, for purposes of this Section, "Indemnitees") (to the extent
not reimbursed by the Borrower) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against an Indemnitee in any way
relating to or arising out of this Agreement or the other Loan Documents or
any action taken or omitted by an Agent under this Agreement or the other
Loan Documents, provided, that no Bank shall be liable to an Indemnitee for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
such Indemnitee's gross negligence or willful misconduct. IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT THE INDEMNITEES SHALL BE
INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS,
LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR
DISBURSEMENTS OF ANY KIND ARISING OUT OF OR RESULTING FROM THE ORDINARY
NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF THE
INDEMNITEES. The Administrative Agent shall not be required to do any act
hereunder or under any other document or instrument delivered hereunder or
in connection herewith or take any action toward the execution or
enforcement of the agencies hereby created, or to prosecute or defend any
suit in respect of this Agreement or the Loan Documents or any collateral
security, unless indemnified to its satisfaction by the holders of the
Notes against loss, cost, liability, and expense. If any indemnity
furnished to the Administrative Agent for any purpose is, in the opinion of
the Administrative Agent, insufficient or becomes impaired, the
Administrative Agent may call for additional indemnity and not commence or
cease to do the acts indemnified against until such additional indemnity is
furnished. Without limitation of the foregoing, each Bank agrees to
reimburse the Administrative Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including external counsel fees and
the allocated costs of internal counsel) incurred by the Administrative
Agent in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement and the other Loan Documents, to the extent that the
Administrative Agent is not reimbursed for such expenses by the Borrower.
Section 8.06. Employees of the Administrative Agent, Etc. The
Administrative Agent may execute any of its respective duties under this
Agreement, the other Loan Documents and any instrument, agreement or
document executed, issued or delivered pursuant hereto or thereto or in
connection herewith or therewith, by or through employees, agents and
attorneys-in-fact, and shall not be answerable for the default or
misconduct of any such employee, agent or attorney-in-fact selected by it
with reasonable care. The Administrative Agent may, and upon the written
instruction of the Majority Banks shall, enforce on behalf of the Banks any
claims which the Administrative Agent and/or the Banks may have against any
such employee, agent or attorney-in-fact, and any recovery therefrom shall
be applied for the pro rata benefit of the Banks.
<PAGE> 78
Section 8.07. Successor Administrative Agent. The Administrative
Agent may resign at any time by giving written notice thereof to the other
members of the Bank Group and the Borrower and may be removed at any time
with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been
so appointed by the Majority Banks, and shall have accepted such
appointment, within thirty (30) days after the retiring Administrative
Agent's giving of notice of resignation or the Majority Banks' removal of
the retiring Administrative Agent, then the retiring Administrative Agent
may, on behalf of the Banks, appoint a successor Administrative Agent,
which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement, subject to
the requirement that such retiring Administrative Agent will execute such
documents and take such actions as may be necessary or desirable to cause
the successor Administrative Agent to be vested with all such rights,
powers, privileges and duties. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of
this Article VIII shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement. All costs and expenses incurred by the Bank Group in connection
with any amendments or other documentation required by this Section 8.07
shall be paid by the Borrower pursuant to Section 9.04 hereof.
Section 8.08. Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless it shall have received notice from a Bank or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default" or "notice of
event of default," as applicable. If the Administrative Agent receives
such a notice from the Borrower, the Administrative Agent shall give notice
thereof to the other members of the Bank Group and, if such notice is
received from a Bank, the Administrative Agent shall give notice thereof to
the other members of the Bank Group and the Borrower. The Administrative
Agent shall be entitled to take action or refrain from taking action with
respect to such Default or Event of Default as provided in this Article
VIII.
Section 8.09. Execution of Loan Documents. Each member of the Bank
Group hereby authorizes and directs the Administrative Agent to execute and
deliver each Loan Document (including, without limitation; those specified
in Section 3.01) to be executed by the Administrative Agent on or about the
Effective Date pursuant to the terms of this Agreement and the other Loan
Documents.
<PAGE> 79
Section 8.10. Syndication Agent, Documentation Agent, Co-Agents, Co-
Lead Arrangers and Book Manager. None of Banks identified on the facing
page or signature pages of this Agreement as a "Syndication Agent",
"Documentation Agent", "Co-Agents", "Co-Lead Arranger" or "Book Manager"
shall have any right, power, obligation, liability, responsibility or duty
under this Agreement other than those applicable to all Banks as such.
Without limiting the foregoing, none of Banks so identified as a
"Syndication Agent", "Documentation Agent", "Co-Agents", "Co-Lead Arranger"
or "Book Manager" shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied,
and will not rely, on any of such Persons so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, or
consent to any departure by any Person herefrom or therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Borrower and the Majority Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Banks, do any of the following: (a)
waive or amend any of the conditions specified in Section 3.01, (b) to
extend the term of or increase the Commitments of the Banks, (c) reduce the
principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, (d) postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable
hereunder, (e) release the Borrower or any other Person from its payment
obligations to the Bank Group, regardless of whether such obligations are
those of a primary obligor, a guarantor or surety, or otherwise, (f) take
action which expressly requires the signing of all the Banks pursuant to
the terms of this Agreement, (g) change the Commitment Percentages or the
aggregate unpaid principal amount of the Notes, or the number of Banks, as
the case may be, required for the Administrative Agent or the Banks or any
of them to take any action under this Agreement or amend the definition of
Majority Banks or (h) amend this Section 9.01; provided, further, that no
amendment, waiver or consent shall unless in writing and signed by the
Administrative Agent in addition to the Banks required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document. No notice to or demand on Borrower
or any other Person in any case shall entitle them to any other or further
notice or demand in similar or other circumstances.
<PAGE> 80
Section 9.02. Participation Agreements and Assignments. (a) (i)
Subject to Section 9.02(a)(ii), each Bank may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, the Loans owing to it and the Note held by it) and the other
Loan Documents; provided, however, that (A) no such assignment shall be
made unless such assignment and assignee have been approved by the
Administrative Agent and, so long as no Default or Event of Default exists,
the Borrower, such approvals not to be unreasonably withheld, provided that
such approvals shall not be required if the assignee is an Affiliate of the
assignor Bank, (B) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations of the assignor under
this Agreement and the other Loan Documents, and no assignment shall be
made unless it covers a pro rata share of all rights and obligations of
such assignor under this Agreement and the other Loan Documents, (C) the
amount of the Commitment of the assigning Bank being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall, unless otherwise agreed
to by the Administrative Agent, in no event be less than $5,000,000 and
shall be an integral multiple of $ 1,000,000, (D) each such assignment
shall be to an Eligible Assignee, (E) the parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance
and recording in the Register (defined below), an Assignment and
Acceptance, together with any Note subject to such assignment, and (F) such
parties shall pay to the Administrative Agent a processing fee of
$2,500.00. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance,
(1) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations under the Loan Documents have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations
of a Bank under the Loan Documents and (2) the assigning Bank thereunder
shall, to the extent that rights and obligations under the Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Loan
Documents (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto).
(ii) In the event any Bank desires to transfer all or any
portion of its rights and obligations under the Loan Documents to any
Person other than an Affiliate of such Bank, it shall give the Borrower and
the Administrative Agent prior written notice of the identity of such
transferee and the terms and conditions of such transfer (a "Transfer
Notice"). So long as no Default or Event of Default has occurred and is
continuing, the Borrower may, no later than ten (10) days following receipt
of such Transfer Notice, designate an alternative transferee and such Bank
shall thereupon be obligated to sell the interests specified in such
Transfer Notice to such alternative transferee, subject to the following:
(A) such transfer shall be made on the same terms and conditions outlined
in such Transfer Notice, (B) such transfer shall otherwise comply with the
terms and conditions of the Loan Documents (including Section 9.02(a)(i)),
and (C) such alternative transferee must be an Eligible Assignee approved
by the Administrative Agent. If the Borrower shall fail to designate an
alternative transferee within such ten (10) day period, such Bank shall,
subject to compliance with the other terms and provisions hereof, be free
to consummate the transfer described in such Transfer Notice.
<PAGE> 81
(b) By executing and delivering an Assignment and Acceptance,
the assigning Bank thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Bank
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other instrument or document furnished pursuant hereto; (ii) such assigning
Bank makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the
other Loan Documents, together with copies of the financial statements
referred to in Section 4.06 and such ther documents and information
as it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon any member of the Bank Group
(including such assigning Bank) and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Administrative Agent to take such action on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and
the other Loan Documents are required to be performed by it as a Bank.
(c) The Administrative Agent shall maintain at its address
referred to in Section 9.03 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the
names and addresses of the Banks and the Commitment of, and principal
amount of the Loans owing to, each Bank from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower and each member of the
Bank Group may treat each Person whose name is recorded in the Register as
a Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any member of the Bank Group at
any reasonable time and from time to time upon reasonable prior notice.
<PAGE> 82
(d) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee representing that it is an Eligible
Assignee, together with any Note subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit D and satisfies all
other requirements set forth in this Section 9.02, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower and the
other members of the Bank Group. Within five (5) Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent, in exchange for the surrendered Notes,
new Notes to the order of such Eligible Assignee in an amount corresponding
to the Commitment assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, new Notes to the order of the assigning Bank in an
amount corresponding to the Commitment retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form prescribed by Section 2.03 hereto.
(e) Each Bank may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Bank's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder)
and the other Loan Documents shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance
of such obligations, and the participating banks or other entities shall
not be considered a "Bank" for purposes of the Loan Documents, (iii)
the participating banks or other entities shall be entitled to the cost
protection provisions contained in Section 2.10 through Section 2.13 and
the rights of setoff contained in Section 7.02, in each case to the same
extent that the Bank from which such participating bank or other entity
acquired its participation would be entitled to the benefit of such cost
protection provisions and rights of setoff and (iv) the Borrower and the
other members of the Bank Group shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under
this Agreement and the other Loan Documents, and such Bank shall retain the
sole right to enforce the obligations of the Borrower relating to the Loans
and to approve any amendment, modification or waiver of any provision of
this Agreement (other than amendments, modifications or waivers with
respect to the amounts of any fees payable hereunder or the amount of
principal of or the rate at which interest is payable on the Loans, or the
dates fixed for payments of principal or interest on the Loans).
(f) Anything in this Section 9.02 to the contrary
notwithstanding, any Bank may at any time, without the consent of the
Borrower or the Administrative Agent, assign and pledge all or any portion
of its Note and the Loans owing to it to any Federal Reserve Bank (and its
transferees) as collateral security pursuant to Regulation A of the Federal
Reserve Board and any Operating Circular issued by such Federal Reserve
Bank. No such assignment shall release the assigning Bank from its
obligations hereunder.
<PAGE> 83
(g) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.02, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Bank by or on behalf of the Borrower; provided that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree (subject to customary exceptions) to preserve the
confidentiality of any confidential information relating to the Borrower
received from such Bank.
Section 9.03. Notices. All correspondence, statements, notices,
requests and demands (collectively "Communications") shall be in writing
(including telegraphic Communications) and mailed, telegraphed, telecopied,
facsimile transmitted or delivered as follows:
if to the Borrower:
Kirby Corporation
1775 St. James Place, Suite 200
Houston, Texas 77056
Attention: Chief Financial Officer
Telecopier: (713) 435-1010
if to the Administrative Agent:
Chase Bank of Texas, National Association
712 Main Street
Houston, Texas 77002
Attention: Houston Diversified Industries
Telecopier: (713) 216-6004
with a copy to:
Chase Securities Inc.
Muniram Apanna
Agency Services
One Chase Manhattan Plaza
8th Floor
New York, New York 10081
Telephone: (212) 552-7943
Telecopier: (212) 552-7490
if to any Bank, at its address for notices set forth in Schedule 9.03, or
as to each such party, at such other address as such party shall designate
in a written Communication to each of the other parties hereto. All such
Communications shall be effective, in the case of written or telegraphed
Communications, when deposited in the mails or delivered to the telegraph
company, respectively, and, in the case of a Communication by telecopy or
facsimile transmission, when telecopied or transmitted against receipt of a
confirmation, in each case addressed as aforesaid, except that
Communications to any member of the Bank Group pursuant to Article II and
Article VIII shall not be effective until received by such Persons.
<PAGE> 84
Section 9.04. Costs and Expenses. The Borrower agrees to pay on
demand (a) all reasonable costs and expenses of the Syndication Agent in
connection with the preparation, execution, delivery and syndication of
this Agreement, including, without limitation, the reasonable fees and
expenses of counsel, (b) all reasonable costs and expenses of the
Administrative Agent incurred in connection with the administration of the
Loan Documents and any other agreements or security documents delivered in
connection with or pursuant to any of the Loan Documents, including,
without limitation, the reasonable fees and expenses of counsel and (c) all
costs and expenses of the Administrative Agent, and during the existence of
an Event of Default, any Bank, incurred in connection with the enforcement
of the Loan Documents and any other agreements or security documents
executed in connection with or pursuant to any of the Loan Documents,
including, but not limited to, the fees and out-of-pocket expenses of
counsel with respect thereto, and the costs and expenses in connection with
the custody, preservation, use or operation of, or the sale of, or
collection from, or other realization upon the sale of, or collection from,
or other realization upon any collateral covered by any of the Loan
Documents or any other documents executed in connection with or pursuant to
any of the Loan Documents. The agreements of Borrower contained in this
Section 9.04 shall survive the termination of the Commitments and the
payment of all other amounts owing hereunder or under any of the other Loan
Documents.
Section 9.05. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Administrative
Agent, the Banks and their respective successors and assigns, except that
the Borrower may not assign or transfer its rights hereunder without the
prior written consent of the Banks.
Section 9.06. Independence of Covenants. All covenants contained in
the Loan Documents shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants,
the fact that such action or condition would be permitted by an exception
to, or otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
Section 9.07. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement and the other
Loan Documents or made in writing by the Borrower in connection herewith or
therewith, shall survive the execution and delivery of this Agreement, the
Notes and the other Loan Documents and the repayment of the Loans. Any
investigation by any member of the Bank Group shall not diminish in any
respect whatsoever its right to rely on such representations and
warranties.
Section 9.08. Severability. Should any clause, sentence, paragraph,
subsection, Section or Article of this Agreement be judicially declared to
be invalid, unenforceable or void, such decision will not have the effect
of invalidating or voiding the remainder of this Agreement, and the parties
hereto agree that the part or parts of this Agreement so held to be
invalid, unenforceable or void will be deemed to have been stricken
herefrom by the parties hereto, and the remainder will have the same force
and effectiveness as if such stricken part or parts had never been included
herein.
<PAGE> 85
Section 9.09. Captions. The captions in this Agreement have been
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this
Agreement.
Section 9.10. Limitation by Law. All provisions of this Agreement
and the other Loan Documents are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be limited to
the extent necessary so that they will not render this Agreement or any
other Loan Document invalid or unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any
applicable law.
Section 9.11. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
agreement.
Section 9.12. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas and
applicable federal law; provided, however, notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Agreement, the Notes
or the other Loan Documents shall be deemed to constitute a waiver of any
rights which any Bank may have under federal legislation relating to the
rate of interest which such Bank may contract for, take, reserve, receive
or charge in respect of any Debt owing to such Bank hereunder. Texas
Finance Code, Chapter 346 (formerly Chapter 15, Subtitle 3, Title 79, of
the Revised Civil Statutes of Texas, 1925), as amended (relating to
revolving loan and revolving triparty accounts), shall not apply to this
Agreement or the Notes or the transactions contemplated hereby.
Section 9.13. Limitation on Interest. Each provision in this
Agreement and each other Loan Document is expressly limited so that in no
event whatsoever shall the amount paid, or otherwise agreed to be paid, by
the Borrower for the use, forbearance or detention of the money to be
loaned under this Agreement or any other Loan Document or otherwise
(including any sums paid as required by any covenant or obligation
contained herein or in any other Loan Document which is for the use,
forbearance or detention of such money), exceed that amount of money which
would cause the effective rate of interest thereon to exceed the Highest
Lawful Rate, and all amounts owed under this Agreement and each other Loan
Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid which are for the use, forbearance or
detention of money under this Agreement or such Loan Document shall in no
event exceed that amount of money which would cause the effective rate of
interest thereon to exceed the Highest Lawful Rate. To the extent that the
Highest Lawful Rate applicable to a Bank is at any time determined by Texas
law, such rate shall be the weekly ceiling (formerly the indicated rate
ceiling) determined in accordance with Tex.Rev.Civ.Stat., Title 79, Article
5069-1D.003, also codified at Texas Finance Code, Section 303.301 (formerly
Article 5069-1.01(a)(i)), as amended; provided, however, to the extent the
<PAGE> 86
Loans are deemed open end accounts as such term is defined in
Tex.Rev.Civ.Stat., Title 79, Article 5069-1B.002(14) (formerly Article 5069-
1.01(f)), the Banks from time to time by notice from the Administrative
Agent to Borrower may revise the aforesaid election of such interest rate
ceiling as such ceiling affects the then-current or future balances of the
Loans outstanding under the Notes. Notwithstanding any provision in this
Agreement or any other Loan Document to the contrary, if the maturity of
the Notes or the obligations in respect of the other Loan Documents are
accelerated for any reason, or in the event of prepayment of all or any
portion of the Notes or the obligations in respect of the other Loan
Documents by the Borrower or in any other event, earned interest on the
Loans and such other obligations of the Borrower may never exceed the
maximum amount permitted by applicable law, and any unearned interest
otherwise payable under the Notes or the obligations in respect of the
other Loan Documents that is in excess of the maximum amount permitted by
applicable law shall be cancelled automatically as of the date of such
acceleration or prepayment or other such event and, if theretofore paid,
shall be credited on the principal of the Notes or, if the principal of the
Notes has been paid in full, refunded to the Borrower. In determining
whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Borrower and the Banks
shall, to the maximum extent permitted by applicable law, amortize,
prorate, allocate and spread, in equal parts during the period of the
actual term of this Agreement, all interest at any time contracted for,
charged, received or reserved in connection with the Loan Documents.
Section 9.14. Indemnification. The Borrower agrees to indemnify,
defend and hold each member of the Bank Group, the Syndication Agent and
the Documentation Agent, as well as their respective officers, employees,
agents, Affiliates, directors and shareholders (collectively, "Indemnified
Persons") harmless from and against any and all loss, liability, damage,
judgment, claim, deficiency or reasonable expense (including interest,
penalties, reasonable attorneys' fees (including without limitation the
allocated cost of internal counsel) and amounts paid in settlement)
incurred by or asserted against any Indemnified Person arising out of, in
any way connected with, or as a result of (i) the execution and delivery of
this Agreement and the other documents contemplated hereby, the performance
by the parties hereto and thereto of their respective obligations hereunder
and thereunder (including but not limited to the making of the Loans by
each Bank) and consummation of the transactions contemplated hereby and
thereby, (ii) the actual or proposed use of the proceeds of the Loans,
(iii) any violation by the Borrower or any of its Subsidiaries of any
Requirement of Law, including but not limited to Environmental Laws, (iv)
any member of the Bank Group being deemed an operator of any real or
personal property of the Borrower or any of its Subsidiaries in
circumstances in which no member of the Bank Group is generally operating
or generally exercising control over such property, to the extent such
losses, liabilities, damages, judgments, claims, deficiencies or expenses
arise out of or result from any Hazardous Materials located in, on or under
such property or (v) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnified Person is
a party thereto; provided that such indemnity shall not apply to any such
<PAGE> 87
losses, claims, damages, liabilities or related expenses that are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct
of, or willful violation of the Loan Documents by, such Indemnified Person.
WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, IT IS THE EXPRESS INTENTION OF THE BORROWER THAT EACH
INDEMNIFIED PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS OR REASONABLE
EXPENSES ARISING OUT OF OR RESULTING FROM THE ORDINARY NEGLIGENCE (WHETHER
SOLE OR CONTRIBUTORY) OR STRICT LIABILITY OF SUCH INDEMNIFIED PERSON. Each
Indemnified Person will attempt to consult with the Borrower prior to
entering into any settlement of any lawsuit or proceeding that could give
rise to a claim for indemnity under this Section 9.14, although nothing
herein shall give the Borrower the right to direct or control any such
settlement negotiations or any related lawsuit or proceeding on behalf of
such Indemnified Party. The obligations of the Borrower under this Section
9.14 shall survive the termination of this Agreement.
Section 9.15 Submission to Jurisdiction. The Borrower hereby
irrevocably submits to the jurisdiction of any Texas state or federal court
sitting in Houston, Texas over any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents, and the
Borrower irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Texas state or federal
court; provided, however, nothing in this Section 9.15 is intended to waive
the right of any member of the Bank Group to remove any such action or
proceeding commenced in any such Texas state court to an appropriate Texas
federal court to the extent the basis for such removal exists under
applicable law. The Borrower irrevocably consents to the service of any
and all process in any such action or proceeding by the mailing by
certified mail of copies of such process to it at its address specified
herein. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in
this Section 9.15 shall affect the right of any member of the Bank Group to
serve legal process in any other manner permitted by law or affect the
right of any member of the Bank Group to bring any action or proceeding
against any of the Borrower, or such person's properties, in the courts of
any other jurisdiction.
Section 9.16. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE BORROWER AND THE BANK GROUP HEREBY IRREVOCABLY AND
EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE BANK GROUP IN
THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
<PAGE> 88
Section 9.17 FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE A LOAN AGREEMENT FOR PURPOSES OF SECTION
26.02(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN ON THE NEXT PAGE]
<PAGE> 89
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of
the date first above written.
KIRBY CORPORATION
By: /S/ Norman W. Nolen
-------------------------------------
Norman W. Nolen
Senior Vice President
Chief Financial Officer and Treasurer
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as
Administrative Agent and as a Bank
By: /S/ Michael Ondruch
-------------------------------------
Name: Michael Ondruch
Title: Vice President
BANK OF AMERICA, N.A., as
Syndication Agent and as a Bank
By: /S/ Claire Liu
-------------------------------------
Name: Claire Liu
Title: Managing Director
BANK ONE, TEXAS, N.A.,
as Documentation Agent and as a Bank
By: /S/ John J. Zollinger, IV
-------------------------------------
Name: John J. Zollinger, IV
Title: Vice President
FIRST UNION NATIONAL BANK,
as Co-Agent and as a Bank
By: /S/ Roy O. Young
-------------------------------------
Name: Roy O. Young
Title: Vice President
[THIS IS A SIGNATURE PAGE TO THE CREDIT AGREEMENT]
<PAGE> 90
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK
BRANCH, as Co-Agent and as a Bank
By: /S/ Michael N. Oakes
-------------------------------------
Name: Michael N. Oakes
Title: Senior Vice President,
Houston Office
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, as Co-Agent and as a Bank
By: /S/ Nipul V. Patel
-------------------------------------
Name: Nipul V. Patel
Title: Assistant Vice President
BANKBOSTON, N.A.
By: /S/ Sean F. McCarthy
-------------------------------------
Name: Sean F. McCarthy
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY
By: /S/ John W. McGhee
-------------------------------------
Name: John W. McGhee
Title: Vice President and Manager
DEN NORSKE BANK ASA
By: /S/ Barbara Gronquist
-------------------------------------
Name: Barbara Gronquist
Title: First Vice President
By: /S/ Chr. Tobias Backer
-------------------------------------
Name: Chr. Tobias Backer
Title: Assistant Vice President
[THIS IS A SIGNATURE PAGE TO THE CREDIT AGREEMENT]
<PAGE> 91
HIBERNIA NATIONAL BANK
By: /S/ S. John Castellano
-------------------------------------
Name: S. John Castellano
Title: Senior Vice President
SOUTHWEST BANK OF TEXAS, N.A.
By: /S/ Gary Tolbert
-------------------------------------
Name: Gary Tolbert
Title: Senior Vice President
[THIS IS A SIGNATURE PAGE TO THE CREDIT AGREEMENT]
<PAGE> 92
ANNEX A
DEFINITIONS
"Acquisition" means a transaction resulting in (a) acquisition by the
Borrower, directly or indirectly, of all or substantially all of the assets
of a Person, or of any business or division of a Person, (b) acquisition by
the Borrower of in excess of 50% of the capital stock, partnership
interests, or other equity of any Person, or otherwise causing such Person
to become a Subsidiary of the Borrower, or (c) a merger or consolidation of
other combination of the Borrower with another Person.
"Adjusted CD Rate" means, for any Interest Period for each Adjusted CD
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the sum of. (a) the rate per annum obtained by dividing (i) the
rate of interest determined by the Administrative Agent to be the
arithmetic average (rounded upward to the nearest whole multiple of 1/100
of 1% per annum, if such average is not such a multiple) of the consensus
bid rate determined by the Administrative Agent for the bid rates per
annum, on or about 9:00 A.M. (Houston time) (or as soon thereafter as
practicable) one Business Day before the first day of such Interest Period,
of certificate of deposit dealers of recognized standing selected by the
Administrative Agent for the purchase at face value of certificates of
deposit of the Administrative Agent in an amount approximately equal to the
Adjusted CD Rate Loan to be made by the Administrative Agent in its
capacity as a Bank and comprising part of such Borrowing and with a
maturity equal to such Interest Period, by (ii) a percentage equal to 100%
minus the Adjusted CD Rate Reserve Percentage for such Interest Period,
plus (b) the Assessment Rate in effect from time to time during such
Interest Period.
"Adjusted CD Rate Borrowing" means a Borrowing consisting of Adjusted
CD Rate Loans.
"Adjusted CD Rate Loan" means a Loan that the Borrower has designated,
or is deemed to have designated, as such in accordance with Article II.
"Adjusted CD Rate Reserve Percentage" means, for the Interest Period
for each Adjusted CD Rate Loan comprising part of the same Borrowing, the
reserve percentage applicable one Business Day before the first day of such
Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement) for a member
bank of the Federal Reserve System in Houston, Texas with deposits
exceeding one billion dollars, or with respect to liabilities consisting of
or including (among other liabilities) U.S. dollar nonpersonal time
deposits in the United States with a maturity equal to such Interest
Period.
<PAGE> 93
"Adjusted Net Income" means, for any period, Net Income for such
period; less, to the extent otherwise included in such Net Income (a) any
gain or loss arising from the sale of capital assets of the Borrower and
its Consolidated Subsidiaries; (b) any gain arising from any write-up of
assets of the Borrower and its Consolidated Subsidiaries; (c) earnings of
any other Person, substantially all of the assets of which have been
acquired by the Borrower or any of its Consolidated Subsidiaries in any
manner, to the extent that such earnings were realized by such other Person
prior to the date of such acquisition;(d) net earnings of any Person (other
than a Consolidated Subsidiary) in which the Borrower or any of its
Consolidated Subsidiaries has an ownership interest, except for the portion
of such net earnings that have been distributed to the Borrower or a
Consolidated Subsidiary; (e) the earnings of any Person to which assets of
the Borrower or any of its Consolidated Subsidiaries shall have been sold,
transferred or disposed of, to the extent that such earnings arise after
the date of such transaction; (f) the earnings of any Person into which the
Borrower or any of its Consolidated Subsidiaries shall have merged, to the
extent that such earnings arise prior to the date of such merger; (g) any
gain arising from the acquisition of any securities of the Borrower or any
of its Consolidated Subsidiaries; and (h) the taxes, if any, included in
the calculation of the consolidated net earnings, if any, described in
clauses (a) through (g); plus, to the extent not otherwise included in such
Net Income, all distributions, other than returns of capital, which have
been made to the Borrower or a Consolidated Subsidiary by any Person, other
than a Consolidated Subsidiary, in which Borrower or any of its
Consolidated Subsidiaries has an ownership interest.
"Affected Bank" has the meaning specified in Section 2.14.
"Affected Interests" has the meaning specified in Section 2.14.
"Affiliate" means, when used with respect to any Person, (a) any other
Person (including any member of the immediate family of any such natural
person) who directly or indirectly beneficially owns or controls five
percent (5%) or more of the total voting power of shares of capital stock
of such Person having the right to vote for directors (or other individuals
performing similar functions) under ordinary circumstances, (b) any Person
controlling, controlled by or under common control with any such Person
(within the meaning of Rule 405 under the Securities Act of 1933) and (c)
any director or executive officer of such Person.
"Administrative Agent" has the meaning specified in the introduction
to this Agreement.
"Administrative Agent's Fee Letter" has the meaning specified in
Section 2.09.
"Agreement" means this Credit Agreement, as the same may from time to
time be amended, supplemented or modified and in effect.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Loan, and such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
<PAGE> 94
"Applicable Amount" means, for any day, with respect to outstanding
Loans of the Types referred to below, and the commitment fees and
utilization fees referred to below (expressed in basis points), as the case
may be, the per annum amount set forth below under the caption "Commitment
Fee," "Applicable Margin for Eurodollar Rate Loans," "Applicable Margin for
Base Rate Loans," "Applicable Margin for Adjusted CD Rate Loans" or
"Utilization Fee", as the case may be, based upon the two highest Debt
Ratings applicable on such date:
<TABLE>
<CAPTION>
Applicable
Margin Applicable Applicable
for Margin for Margin For
Debt Commitment Eurodollar Base Rate Adjusted CD Utilization
Rating Fee Rate Loans Loans Rate Loans Fee
- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
>BBB+/Baa1 17.5 bps 75.0 bps 0 87.5 12.5 bps
- -
>BBB/Baa2 20.0 bps 87.5 bps 0 100.00 12.5 bps
- -
>BBB-/Baa3 25.0 bps 100.0 bps 0 112.5 25.0 bps
- -
>BB+/Ba1 30.0 bps 125.0 bps 0 137.5 25.0 bps
- -
<BB+/Ba1 or unrated 35.0 bps 150.0 bps 0 162.5 25.0 bps
</TABLE>
For purpose of the foregoing, (i) if either Moody's, S&P or Duff &
Phelps shall not have in effect a Debt Rating (other than by reason of the
circumstances referred to in the last sentence of this definition), then
such rating agency shall be deemed to have established a rating in the
lowest of the categories above; (ii) if the two highest ratings established
or deemed to have established by Moody's, S&P and Duff & Phelps shall
differ by more than one level, the rating which is one level above the
lower rating shall apply; and (iii) if the ratings established or deemed
to have been established by Moody's, S&P or Duff & Phelps for the Debt
Rating shall be changed (other than as a result of a change in the rating
system of Moody's, S&P or Duff & Phelps), such change shall be effective as
of the date on which it is first announced by the applicable rating agency.
Each change in the Applicable Amount shall apply during the period
commencing on the effective date of such change and ending on the date
immediately preceding the effective date of the next such change. If the
rating system of Moody's, S&P or Duff & Phelps shall change, or if either
such rating agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Banks shall negotiate in good faith
to amend this definition to reflect such changed rating system or the
unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Amount shall be
determined by reference to the rating most recently in effect prior to such
change or cessation.
<PAGE> 95
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as well capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of
12 C.F.R. 327.4 (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor thereto) for such Corporation's (or
such successor's) insuring time deposits at offices of such institution in
the United States. The Adjusted CD Rate shall be adjusted automatically on
and as of the effective date of any change in the Assessment Rate.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Bank and an Eligible Assignee and accepted by the Administrative
Agent, in substantially the form of Exhibit D.
"Availability Period" means the period from the Effective Date to the
Revolving Termination Date.
"Bank Group" means, collectively, the Administrative Agent and the
Banks.
"Banks" has the meaning specified in the introduction to this
Agreement.
"Base Rate" means, as of any particular date, a rate per annum equal
to the higher of (a) the Federal Funds Rate plus one-half of one percent
(1/2%), and (b) the Base Rate per annum most recently announced by the
Administrative Agent as its base rate of interest per annum, automatically
fluctuating upward or downward, as the case may be, on the day of each
announcement without special notice to the Borrower or any other Person.
The Borrower acknowledges that the base rate referred to in clause (b) of
the preceding sentence may not be the Administrative Agent's best or lowest
rate, or favored rate, and any statement, representation or warranty in
that regard or to that effect is hereby expressly disclaimed by the
Administrative Agent.
"Base Rate Borrowing" means a Borrowing consisting of Base Rate Loans.
"Base Rate Loan" means a Loan that the Borrower has designated, or is
deemed to have designated, as such in accordance with Article II.
"Borrower" has the meaning specified in the introduction to this
Agreement.
"Borrowing" means a group of Loans of a single Type made by the Banks,
or Converted into such, as applicable, on a single date and as to which a
single Interest Period is in effect.
"Borrowing Date" means, with respect to the initial funding of any
Borrowing, the date on which the proceeds of such Borrowing are to be made
available to the Borrower.
"Borrowing Request" has the meaning specified in Section 2.02.
<PAGE> 96
"Business Day" means a day of the year on which banks are not required
or authorized to close in Houston, Texas or in New York, New York and, if
the applicable Business Day relates to any Eurodollar Rate Loans, on which
dealings are carried on in the applicable Eurodollar interbank market.
"Capital Expenditures" means, for any period, the expenditures and
costs made by the Borrower and its Consolidated Subsidiaries (on a
consolidated basis) during such period (whether paid in cash or accrued as
liabilities during that period and including that portion of Capital Leases
that is capitalized on the consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries) that, in accordance with generally accepted
accounting principles consistently applied, are required to be included in
or reflected by the property, plant or equipment or similar fixed asset
accounts reflected in the consolidated balance sheet of the Borrower.
"Capital Lease" means, as to any Person, any lease or rental agreement
in respect of which such Person's obligations as lessee under such lease or
rental agreement, constitute obligations which shall have been or should
be, in accordance with generally accepted accounting principles
consistently applied, capitalized on the balance sheet of such Person.
"CD Lending Office" means, with respect to any Bank, the office of
such Bank specified as its "CD Lending Office" on Schedule 2.01 (or, if no
such office is specified, its Domestic Lending Office), or such other
office of such Bank as such Bank may from time to time specify to the
Borrower and the Administrative Agent.
"Change of Control" means any of (a) the acquisition by any Person or
two or more Persons (excluding underwriters in the course of their
distribution of voting stock in an underwritten public offering) acting in
concert, of beneficial ownership (within the meaning of Rule l3d-3 of the
Securities and Exchange Commission) of 25% or more of the outstanding
shares of voting stock of the Borrower, (b) 30% or more of the members of
the Board of Directors of the Borrower on any date shall not have been (i)
members of the Board of Directors of the Borrower on the date 12 months
prior to such date or (ii) approved by Persons who constitute at least a
majority of the members of the Board of Directors of the Borrower as
constituted on the date 12 months prior to such date, (c) all or
substantially all of the assets of the Borrower are sold in a single
transaction or series or related transactions to any Person or (d) the
Borrower merges or consolidates with or into any other Person, with the
effect that immediately after such transaction the stockholders of the
Borrower immediately prior to such transaction hold less than 75% of the
total voting power entitled to vote in the election of directors, managers
or trustees of the Person surviving such transaction.
"Chase" means Chase Bank of Texas, National Association.
"Commitment" means, as to any Bank, the amount of such Bank's
Commitment set forth on Schedule 2.01, as such Commitment may be reduced or
terminated pursuant to Section 2.04 or Section 7.01.
<PAGE> 97
"Commitment Percentage" means, as to any Bank, a percentage determined
pursuant to the following formula: C / T) x 100 = CP; where C is such
Bank's Commitment (without giving effect to any termination of the
Commitments pursuant to Section 7.01), T is the Total Commitment (without
giving effect to any termination of the Commitments pursuant to Section
7.01) and CP is such percentage.
"Communications" has the meaning specified in Section 9.03.
"Consolidated Subsidiary" means, as of any date, any Subsidiary of the
Borrower that, in accordance with generally accepted accounting principles,
would be included in the consolidated financial statements of the Borrower
prepared as of such date.
"Continuation Date", "Conversion Date" and "Continuation/Conversion
Date" means, when used with respect to the Conversion or continuation of
any group of Loans, (a) the date such Loans are to be (i) Converted into
Loans of another Type or (ii) continued as Loans of the same Type, but with
a different Interest Period, in each case pursuant to Section 2.02 or
otherwise in accordance with Article II.
"Continuation Notice" has the meaning specified in Section 2.02.
"Conversion Notice" has the meaning specified in Section 2.02.
"Convert," "Conversion" and "Converted" each refers to a conversion of
Loans of one Type into Loans of another Type pursuant to Section 2.02 or
otherwise in accordance with Article II.
"Current Liabilities" means, as of any date, all liabilities
(including, without limitation, accounts payable incurred for services
rendered and property purchased in the ordinary course of business) which
would be reflected as current liabilities on a consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries prepared as of such date
in accordance with generally accepted accounting principles consistently
applied, but excluding current maturities of Funded Debt of the Borrower
and its Consolidated Subsidiaries as of such date.
"Debt" of any Person shall mean, without duplication: (a) any
obligation of such Person for borrowed money, (b) any obligation of such
Person evidenced by bonds, debentures, notes or other similar debt
instruments, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such
Person, (d) any obligation of such Person for the deferred purchase price
of any property or services, except accounts payable arising in the
ordinary course of such Person's business that have been outstanding less
than ninety (90) days since the date of the related invoice, (e) the
present value (discounted at the implicit rate, if known, or ten percent
(10%) per annum otherwise) of all Capital Leases of such Person, (f) any
Derivative Obligations of such Person, (g) any reimbursement obligations of
such Person in respect of drawings under a letter of credit or similar
instrument, and (h) any indebtedness or obligations of others of the type
described in clauses (a) through (g) that is Guaranteed by such Person or
secured by a Lien on any asset of such Person.
<PAGE> 98
"Debt Rating" means the rating for senior, unsecured, long-term
indebtedness for borrowed money of the Borrower that is not guaranteed by
any other Person or subject to any other credit enhancement.
"Default" means an event which with the giving of notice or the lapse
of time or both could, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning specified in Section 2.06.
"Derivative Obligations" means, with respect to any Person, payment
obligations with respect to foreign exchange transactions and interest
rate, currency and commodity swaps, caps, floors, collars, forward sale
contracts, other similar obligations and combinations of the foregoing
(collectively, "swaps"). For the purposes of this Agreement, the amount of
any Derivative Obligations shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that all swaps had terminated at the
end of such fiscal quarter, and in making such determination, if any
agreement relating to any such swap provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides
for the simultaneous payment of amounts by and to such Person, then in each
such case, the amount of such obligation shall be the net amount so
determined.
"Distribution" means, in respect of any corporation, association or
other business entity: (a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation, association or
other business (except distributions in such stock or other equity
interest); and (b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase such
stock or other equity interests (except when solely in exchange for such
stock or other equity interests) unless made, contemporaneously, from the
net proceeds of a sale of such stock or other equity interests.
"Dixie Note Purchase Agreement" shall mean the Note Purchase Agreement
dated as of August 12, 1992 among Dixie Carriers, Inc., now called Kirby
Inland Marine, Inc., and the note purchasers named therein, relating to
Kirby Inland Marine's $50,000,000 8.22% Senior Notes due June 30, 2002.
"Dollars" and "$" each means lawful money of the United States.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" on Schedule 2.01,
or such other office of such Bank as such Bank may from time to time
specify to the Borrower and the Administrative Agent.
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"Effective Date" means October 12, 1999, which is the date on which
the conditions to effectiveness set forth in Article III to this Agreement
are first satisfied.
<PAGE> 99
"Eligible Assignee" means (a) any Bank or any Affiliate of any Bank;
(b) a commercial bank organized under the laws of the United States, or any
state thereof, and having total assets in excess of $1,000,000,000 and
having deposits rated in either of the two highest generic letter rating
categories (without regard to subcategories) from either Standard & Poor's
Rating Group or Moody's Investors Service, Inc.; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development ("OECD"), or a
political subdivision of any such country, and having total assets in
excess of $ 1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any
country which is a member of the OECD; and (e) any other financial
institution approved by the Administrative Agent and the Syndication Agent.
"Environmental Laws" means federal, state or local laws, rules or
regulations, and any judicial, arbitral or administrative interpretations
thereof, including, without limitation, any judicial, arbitral or
administrative order, judgment, permit, approval, decision or determination
pertaining to health, safety or the environment in effect at the time in
question, including, without limitation, the Clean Air Act, as amended, the
Oil Pollution Act of 1990, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and Health Act,
as amended, the Resource Conservation and Recovery Act, as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendment and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, comparable
state and local laws, and other environmental conservation and protection
laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed to also refer to any successor
sections.
"ERISA Affiliate" means any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue Code) as the Borrower, (ii) partnership or other
trade or business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with
the Borrower, (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as the Borrower,
any corporation described in clause (i) above or any partnership or trade
or business described in clause (ii) above or (iv) other Person required to
be aggregated with the Borrower or an ERISA Affiliate thereof, as defined
above, pursuant to Section 414(o) of the Internal Revenue Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
<PAGE> 100
"Eurodollar Event" has the meaning specified in Section 2.12.
"Eurodollar Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" on
Schedule 2.01 (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Bank as such Bank may from time to
time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Loan comprising part of the same Borrowing, an interest rate per annum
equal to the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rates per
annum at which deposits in U.S. dollars are offered to the Administrative
Agent by prime banks in whatever Eurodollar interbank market may be
selected by the Administrative Agent in its sole discretion, acting in good
faith, on or about 9:00 a.m. (Houston time) (or as soon thereafter as
practicable) two Business Days before the first day of such Interest
Period, and in accordance with the then existing practice in such
Eurodollar interbank market for delivery of such deposits on the first day
of such Interest Period in immediately available funds, in an amount
substantially equal to the Eurodollar Rate Loan to be made by the
Administrative Agent in its capacity as a Bank and comprising part of such
Borrowing and for a period equal to such Interest Period.
"Eurodollar Rate Borrowing" means a Borrowing consisting of Eurodollar
Rate Loans.
"Eurodollar Rate Loan" means a Loan that the Borrower has designated,
or is deemed to have designated, as such in accordance with Article II.
"Eurodollar Rate Reserve Percentage" means, as to any Bank for the
Interest Period for any Eurodollar Rate Loan, the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Bank with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 7.01.
"Excluded Affiliate" means (a) any Subsidiary of the Borrower other
than a Consolidated Subsidiary, and (b) all Persons, other than
Subsidiaries, in which the Borrower, directly or indirectly, owns or
controls five percent (5%) or more of the equity interests of such Person.
"Existing Credit Agreement" means the Credit Agreement dated as of
September 19, 1997, by and among the Borrower, Chase Bank of Texas,
National Association as Funds Administrator and Agent and the other banks
therein named, as in effect on the date hereof.
<PAGE> 101
"Fair Market Value" shall mean (a) with respect to any asset (other
than Dollars) the price at which a willing buyer would buy and a willing
seller would sell such asset in an arms length transaction and (b) with
respect to Dollars, the amount of such Dollars.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of Dallas, or, if such
rate is not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fixed Charges" means, for any period, (without duplication) the sum
of (a) all Interest Expense for such period, plus (b) the aggregate rentals
paid by the Borrower and its Consolidated Subsidiaries (on a consolidated
basis) under Capital Leases during such period, plus (c) all Capital
Expenditures made by the Borrower and its Consolidated Subsidiaries during
such period (excluding any Capital Expenditures made after the Effective
Date for the expansion of such Person's fleet of marine barges, boats and
other operating equipment, as opposed to the mere replacement of such
Person's existing fleet of marine barges, boats and other operating
equipment), plus (d) the aggregate amount of (i) all scheduled principal
payments required or made during such period on account of Funded Debt that
provides for scheduled principal payments prior to final maturity, (ii) in
the case of any Funded Debt (other than Debt under revolving credit
facilities) that has an original term in excess of three years and does not
provide for scheduled principal payments prior to its final maturity, an
amount equal to one-sixtieth (1/60th) per calendar quarter of the average
outstanding principal balance thereof, provided, however, that to the
extent such Funded Debt is attributable to a Guaranty by the Borrower or a
Consolidated Subsidiary of a limited portion of any Debt of an Excluded
Affiliate, the amount included in Fixed Charges pursuant to this clause (d)
shall be limited to the Borrower's proportionate share of such Debt (based
upon the amount so Guaranteed relative to the total amount of such Debt).
"Fixed Rate" means the Adjusted CD Rate or the Eurodollar Rate.
"Fixed Rate Borrowing" means an Adjusted CD Rate Borrowing or a
Eurodollar Rate Borrowing.
"Fixed Rate Loan" means an Adjusted CD Rate Loan or a Eurodollar Rate
Loan.
<PAGE> 102
"Funded Debt" means, as of any date, the sum of the following: (a) all
Debt of the Borrower and its Consolidated Subsidiaries on a consolidated
basis as of such date, less (b) to the extent included in the amount
described in clause (a), the sum of the following (without duplication):
(i) all Current Liabilities (other than Current Liabilities that represent
Debt for borrowed money or Capital Leases) on a consolidated basis as of
such date, (ii) any Debt of any Consolidated Subsidiary in excess of the
Borrower's proportionate share thereof (based on its direct or indirect
equity interest therein), (iii) all other deferred long term liabilities
that do not represent Debt for borrowed money or Capital Leases, including
deferred compensation, deferred revenue and other deferred items classified
as other liabilities of the Borrower and its Consolidated Subsidiaries on a
consolidated basis as of such date, and (iv) all Derivative Obligations of
the Borrower and its Consolidated Subsidiaries as of such date; plus (c) to
the extent not otherwise included in the amount described in clause (a),
the sum of the following (without duplication): (1) all Debt of the
Borrower and its Consolidated Subsidiaries outstanding under a revolving
credit or similar agreement, (ii) the present value (discounted at the
implicit rate, if known, or ten percent (10%) per annum otherwise) of all
obligations in respect of Capital Leases of the Borrower and its
Consolidated Subsidiaries, and (iii) all obligations of the Borrower and
its Consolidated Subsidiaries under Guaranties of Debt.
"Governmental Authority" means any nation or government, any federal,
state, province, city, town, municipality, county, local or other political
subdivision thereof or thereto and any court, tribunal, department,
commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranties" means, as to any Person, all obligations (other than
endorsements in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or, in effect,
guaranteeing any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, including all obligations incurred
through an Agreement, contingent or otherwise, by such Person: (a) to
purchase such Debt or any property or assets constituting security
therefor, (b) to advance or supply funds (i) for the purchase or payment of
such Debt or (ii) to maintain working capital or other balance sheet
conditions or otherwise to advance or make available funds for the purchase
or payment of such Debt, (c) to lease property or to purchase securities or
other property or services primarily for the purpose of assuring the owner
of such Debt of the ability of the primary obligor to make payment of the
Debt or (d) otherwise to assure the owner of the Debt of the primary
obligor against loss in respect thereof.
"Hazardous Materials" means any pollutant, contaminant, solid waste,
asbestos, petroleum product, crude oil or a fraction thereof, any toxic or
hazardous substance, material or waste, any flammable, explosive or
radioactive material, any chemical which causes cancer or reproductive
effects, or any other material or substance not mentioned above which is
regulated under any Environmental Law.
<PAGE> 103
"Highest Lawful Rate" means, as to any Bank, at the particular time in
question, the maximum nonusurious rate of interest which, under applicable
law, such Bank is then permitted to charge the Borrower on the Loans or the
other obligations of the Borrower under the Loan Documents, and as to any
other Person, at the particular time in question, the maximum nonusurious
rate of interest which, under applicable law, such Person is then permitted
to charge with respect to the obligation in question. If the maximum rate
of interest which, under applicable law, the Banks are permitted to charge
the Borrower on the Loans or the other obligations of the Borrower under
the Loan Documents shall change after the date hereof, the Highest Lawful
Rate shall be automatically increased or decreased, as the case may be, as
of the effective time of such change without notice to the Borrower or any
other Person.
"Hollywood Marine Merger" means the merger of Hollywood Marine, Inc.
with and into Kirby Inland Marine pursuant to the Agreement and Plan of
Merger dated July 28, 1999 by and among the Borrower, Kirby Inland Marine,
Hollywood Marine, Inc. and the shareholders of Hollywood Marine, Inc.
"Hostile Acquisition" shall mean any transaction or series of
transactions in which the Borrower or any of its Subsidiaries, directly or
indirectly, purchases or acquires, or offers to purchase or acquire, an
aggregate of five percent (5%) or more of the equity securities or
controlling interest of any Person, for any type of consideration, without
the prior written consent of such Person's Board of Directors or other
controlling body.
"Interest Expense" means, for any period, the aggregate of all
interest expense deducted in the calculation of the Net Income of the
Borrower for such period, determined in accordance with generally accepted
accounting principles.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar quarter and
each date such Loan is converted in full into another Type of Loan,
provided, however, that if any Interest Period for an Adjusted CD Rate Loan
or Eurodollar Rate Loan exceeds 90 days or three months, respectively, the
date that falls 90 days or three months (as the case may be) after the
beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, for each Loan comprising part of the same
Borrowing, the period commencing on the date of such Loan or the date of
the Conversion of such Loan, as applicable, and ending on the last day of
the period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be (a) in the case of an
Adjusted CD Rate Loan, 30, 60, 90 or 180 days, (b) in the case of a Base
Rate Loan, a period ending on the Maturity Date, and (c) in the case of a
Eurodollar Rate Loan, 1, 2, 3 or 6 months; provided, however, that:
(i) the Borrower may not select any Interest Period for a
Loan that ends after the Maturity Date;
<PAGE> 104
(ii) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(iii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business
Day, provided, in the case of any Interest Period for a Eurodollar Rate
Loan, that if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Final
Maturity Date; and
(v) after the Revolving Termination Date, the aggregate
principal amount of Loans represented by Base Rate Loans, Eurodollar Loans
or Adjusted CD Rate Loans having Interest Periods that will expire on or
before the due date of a scheduled principal payment shall equal or exceed
the amount of such principal payment.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time (or any successor statute), and the regulations
promulgated thereunder.
"Investment" means any direct or indirect investment by one Person
(the "investor") in another Person (the "investee"), including, without
limitation, (a) any loan or advance, whether initially funded by the
investor or acquired by the investor from a third party, (b) any
acquisition of equity interests by the investor, whether directly from the
investee or from a third party by way of share purchase, merger or
otherwise, (c) any capital or other contribution to the investee, whether
made in cash or other assets, or by contributing a promissory note payable
by the investor to the investee, (d) any Guarantee by the investor of Debt
of the investee, and (e) the Fair Market Value of any assets or services
transferred to the investee less the Fair Market Value of any consideration
received by the investor in exchange therefor; provided, however, that the
term "Investment" shall not include undistributed earnings on an
Investment; and the amount of an "Investment," for purposes of Section 6.08
hereof, shall be reduced by the amount of capital returned to the investor
by the investee. The amount of any Investment that is made by transferring
property other than Dollars shall be the Fair Market Value of the property
so transferred.
"Joint Letter" means the letter agreement dated October 1, 1999 among
the Borrower, the Administrative Agent and the Syndication Agent.
"Kirby Inland Marine" means Kirby Inland Marine, Inc., a Delaware
corporation, formerly known as Dixie Carriers, Inc.
<PAGE> 105
"Lien" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind (whether
voluntary or involuntary, and whether imposed or created by operation of
law or otherwise) upon, or pledge of, any of its property or assets,
whether now owned or hereafter acquired, or any conditional sale agreement,
Capital Lease or other title retention agreement.
"Loan" has the meaning specified in Section 2.01.
"Loan Documents" shall mean this Agreement, the Notes, the
Administrative Agent's Fee Letter and all other agreements, instruments and
documents, including, without limitation, security agreements, notes,
warrants, guaranties, mortgages, deeds of trust, subordination agreements,
pledges, powers of attorney, consents, assignments, collateral assignments,
letter agreements, contracts, notices, leases, amendments, financing
statements, letter of credit applications and reimbursement agreements, and
all other writings heretofore, now, or hereafter executed by or on behalf
of the Borrower, any of its Affiliates or any other Person in connection
with or relating to this Agreement, together with all agreements,
instruments and documents referred to therein or contemplated thereby.
"Majority Banks" means at any time Banks holding at least sixty six
and two-thirds percent (66 2/3%) of the then aggregate unpaid principal
amount of the Loans or, if no Loans are outstanding, Banks having
Commitment Percentages in the aggregate equal to at least sixty six and two-
thirds percent (66 2/3%).
"Material Adverse Effect" means, as to any Person, a material adverse
effect on (a) the business, property, assets, operations or condition,
financial or otherwise, of such Person or (b) on the ability of such Person
to perform its obligations under the Loan Documents to which it is a party
or to consummate the transactions contemplated thereby; or (c) the
legality, validity, binding effect or enforceability against such Person of
any Loan Document.
"Material Debt" means, as at any date, an amount equal to five percent
(5 %) of the Borrower's Funded Debt as of such date.
"Material Subsidiaries" means, collectively, each Consolidated
Subsidiary of the Borrower that meets any of the following conditions: (a)
the aggregate Investment of the Borrower and its other Consolidated
Subsidiaries in such Consolidated Subsidiary exceeds five percent (5%) of
the total assets of the Borrower and its Consolidated Subsidiaries as of
the end of the most recently completed calendar year; or (b) the Borrower
and its other Consolidated Subsidiaries' proportionate share of the total
assets (after intercompany eliminations) of such Consolidated Subsidiary
exceeds five percent (5%) of the total assets of the Borrower and its
Consolidated Subsidiaries as of the end of the most recently completed
calendar year; or (c) the Borrower and its other Consolidated Subsidiaries'
equity in the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in accounting
principle of such Consolidated Subsidiary exceeds five percent (5%) of Net
Income for the most recently completed calendar year.
<PAGE> 106
"Maturity Date" means October 9, 2004 or the earlier termination in
whole of the Commitments in accordance with the provisions of this
Agreement.
"Modified Net Cash Flow" means, for any period, (without duplication)
the sum of (a) Net Cash Flow for such period plus (b) the amount of any
current tax expense deducted from gross income in determining Net Cash Flow
for such period, plus (c) to the extent not included in Net Cash Flow for
such period by reason of clause (c) of the definition Adjusted Net Income,
Net Cash Flow, adjusted in the manner described in clause (b) of this
definition, for such period of any Person acquired by the Borrower or any
of its Consolidated Subsidiaries during such period.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Flow" means, for any period, the sum of the following: (a)
Adjusted Net Income for such period, plus (b) all non-cash charges (such as
deferred taxes, depreciation expense and amortization of intangibles) which
were deducted from gross income in determining Adjusted Net Income for such
period, plus (c) the amount of Interest Expense which was deducted in the
calculation of Adjusted Net Income for such period.
"Net Income" means, for any period, the consolidated net earnings of
the Borrower and its Consolidated Subsidiaries for such period, determined
in accordance with generally accepted accounting principles.
"Net Worth" means, as of any date, the total shareholder's equity
(including capital stock, additional paid-in capital and retained earnings
after deducting treasury stock) which would appear on a consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries prepared as
of such date in accordance with generally accepted accounting principles.
"Note" means a promissory note of the Borrower payable to the order of
a Bank, in substantially the form of Exhibit C, evidencing the aggregate
indebtedness of the Borrower to such Bank resulting from the Loans made by
such Bank, together with all modifications, extensions, renewals and
rearrangements thereof from time to time in effect.
"Other Taxes" has the meaning specified in Section 2.10.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or other entity, or Governmental
Authority.
"Plan" means any employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Internal Revenue Code, and in respect of which the Borrower, or
any ERISA Affiliate is an "employer" as defined in Section 3(5) of ERISA.
<PAGE> 107
"Quarterly Payment Date" means each of September 30, December 31,
March 31 and June 30 of each year.
"Register" has the meaning specified in Section 9.02.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System (respecting margin credit extended by banks), as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System (respecting borrowers who obtain margin credit) as
the same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment (including the abandonment or discarding of barrels,
containers and other closed receptacles).
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requirements of Environmental Laws" means the requirements of any
applicable Environmental Law relating to or affecting the Borrower or any
of its Subsidiaries or the condition or operation of such Person's business
or its properties, both real and personal.
"Requirements of Law" shall mean any federal, state or local law, rule
or regulation, permit or other binding determination of any Governmental
Authority.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President, the Chief Financial Officer or the Treasurer of
such Person, or any employee of such Person designated in writing as a
Responsible Officer by the Chief Executive Officer of such Person.
"Restricted Investment" means (a) any Investment by the Borrower or a
Consolidated Subsidiary in an Excluded Affiliate and (b) any payment by the
Company or any Consolidated Subsidiary of Debt of any Excluded Affiliate to
the extent the Company or such Consolidated Subsidiary is not legally
obligated to make such payment under the terms of such Debt.
"Restricted Payment" means any Distribution in respect of the Borrower
or any Subsidiary of the Borrower (other than on account of capital stock
or other equity interests of a Subsidiary of the Borrower), including,
without limitation, any Distribution resulting in the acquisition by the
Borrower of securities which would constitute treasury stock. For purposes
of this Agreement, the amount of any Restricted Payment made in property
shall be the greater of (x) the fair market value of such property (as
determined by good faith by the board of directors (or equivalent governing
body) of the person making such Restricted Payment) and (y) the net book
value thereof on the books of such Person, in each case determined as of
the date on which such Restricted Payment is made.
<PAGE> 108
"Revolving Termination Date" means the earlier to occur of (a) October
9, 2000, and (b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc.
"Subsidiary" means, with respect to any Person, each other Person of
which or in which such Person and its other Subsidiaries own, hold or
control, directly or indirectly, securities or other ownership interests `
having ordinary voting power, in the absence of contingencies, to elect a
majority of the board of directors of such other Person, or other persons
performing similar functions for such Person, or, if there are no such
directors or persons, having general voting power with respect to the
activities of such Person, it being understood that the power to elect
exactly 50% of the board of directors or such other persons does not
constitute a "majority" as used herein. Unless the context otherwise
requires, all references to a Subsidiary shall be considered to be
references to Subsidiaries of the Borrower.
"Substitution Event" has the meaning specified in Section 2.14.
"Syndication Agent's Fee Letter" has the meaning specified in Section
2.09.
"Taxes" has the meaning specified in Section 2.10.
"Total Commitment" means an amount equal to the sum of the Banks'
Commitments.
"Transfer Notice" has the meaning specified in Section 9.02.
"Type" means, with respect to any Loan, the type of interest rate
applicable to such Loan pursuant to this Agreement, and refers to a Base
Rate Loan or a Eurodollar Rate Loan, each of which shall be a "Type" of
Loan.
"Year 2000 Problem" means the inability of computers, as well as
imbedded microchips in non-computing devices, to perform properly date-
sensitive functions after December 31, 1999.
"Year 2000 Program" has the meaning set forth in Section 4.16.
<PAGE> 109
SCHEDULE 2.01
COMMITMENTS AND COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Bank Commitment Commitment
Percentage
- -------------------------------------- --------------- ------------------
<S> <C> <C>
Bank of America, N.A. $39,000,000 19.5000000%
Chase Bank of Texas, National
Association $9,000,000 4.5000000%
Bank One, Texas, N.A. $27,000,000 13.5000000%
First Union National Bank $20,000,000 10.0000000%
Industrial Bank of Japan, Limited,
New York Branch $20,000,000 10.0000000%
Wells Fargo Bank (Texas), National
Association $20,000,000 10.0000000%
BankBoston, N.A. $15,000,000 7.5000000%
The Bank of Tokyo-Mitsubishi, Ltd.,
Houston Agency $15,000,000 7.5000000%
Den norske Bank, ASA $15,000,000 7.5000000%
Hibernia National Bank $10,000,000 5.0000000%
Southwest Bank of Texas $10,000,000 5.0000000%
TOTAL: $200,000,000 100%
</TABLE>
<PAGE> 110
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
23.1 Consent of KPMG LLP
<PAGE> 111
Exhibit 23.1
[KPMG LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Hollywood Marine, Inc.:
We consent to the incorporation by reference in the registration
statements (No. 33-62116), (No. 33-56195) on Form S-3 and (No. 33-
681400), (No. 2-67954), (No. 2-84789), (No. 33-57621), (No. 33-
57625) on Form S-8 of Kirby Corporation of our report dated March
15, 1999, with respect to the consolidated balance sheets of
Hollywood Marine, Inc. and affiliated entities as of December 31,
1998 and 1997, and the related consolidated statements of
operations, stockholder's equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, which
report appears in the Form 8-K of Kirby Corporation dated October
14, 1999.
KPMG LLP
Houston, Texas
October 14, 1999
